When selling anything whether it is a house a car a piece of art or 100 shares of stock, owners need to wait until there is a strong demand to get top dollar. The great news for homeowners, according to Realtors in all 50 states is that the current housing market is experiencing a stronger demand than we have seen in some time.
The National Association of Realtors reports every month on upcoming sales and sales that have already closed. In the first quarter of 2013, pending sales have been higher than anytime in 2012. This is great news because the last time the index showed a higher reading was in April 2010 just before the deadline for the home buyer tax credit (which turned out to be a very short term jump). The National Association of Realtors also reported that home sales that actually closed have been better year over year for 20 straight months and sales are at the highest level since the tax credit. Buyers agents are reporting that their clients are receiving offers closer to the list price and the time the home is on the market is much shorter.
Over the last five years, homeowners trying to sell their homes had a hard time but at least they didn't have to compete with new construction. Those days are over. As the market is recovering, more and more home builders are beginning to build spec houses. The National Association of Realtors revealed new home sales are up 19%. These brand new homes with warrantys and custom colors and fixtures will again become tough competition.
Single-family new permits in February were up 25.5% above February 2012. Single-family housing starts in February were 18.5% above February 2012 and single-family housing completions in February were up 32.9%.
Supply and demand is part of Economics 101. If the supply of anything is low, the price will always be high, as long as there is demand. In real estate, supply is the current month’s number of homes for sale. The calculation is pretty simple, the number of homes for sale divided by the number of homes sold in the previous month.
Realtors try to predict (guess) at how many houses make a sellers market and how many makes a buyers market but here is a good estimate:
1-4 months’ supply creates a sellers’ market where there are not enough homes to meet the buyer demand. This is a sellers market. 5-6 months’ supply creates a balanced market. 7-8 months’ supply creates a buyers’ market because the number of homes for sale exceeds the demand.This was where we have been prior to 2012.
Here is my favorite statistic of all: The average days it takes to sell a home has dropped by over 20% from last year.