May 2018 Market Update for Sellers
I recently went to a meeting at my Keller Williams office. We watched and discussed some of Gary Keller’s “Vision” speech from this year. This is primarily a discussion about the current market for real estate by looking at trends and expectations for the following years.
Even as a math person, I know that looking through a bunch of graphs with tons of numbers can sometimes be overwhelming to digest. So I figured I’d give a quick summary on what this data shows.
This post is just going to focus on the sellers in the market. Honestly, it’s a great time to sell or buy real estate. So, I plan to do a post on why it’s a good time to buy as well. It is currently what we call a “seller’s market” which means the sellers primarily have the upper hand. I think as agents we may sometimes throw that phrase around a lot, but I don’t think it should scare buyers away. So, don’t fret…I plan to explain why buying in this market makes sense too. So stay tuned by subscribing to my posts!
This shows the sales amount of houses by month. 2017 was actually the best year for home sales in the last 11 years. Right now, market analysts believe that we should see about the same trend for 2018 just by looking at the numbers for the first part of the year. That means we are still in a strong market if we are expecting to be pretty similar to 2017.
Before we talk about this graph, let me define what it means when we refer to “months supply of inventory”. This tells us how many months of selling real estate we could expect with just the houses that are currently on the market and not adding new listings. Think of it like a grocery store seeing how long it takes to sell all the bread on their shelves and never restock. In 2017, it was 3.9 months. You can see on the right side of the graph it shows “seller’s market”, “balanced”, and “buyer’s market”. The balanced market is a 6 month supply of inventory.
So what the heck does this mean? WE ARE LOW ON INVENTORY!! You may have heard of houses being under contract within 2 days with 10+ offers over asking price. Well, that’s mainly because there’s only 3.9 months of inventory out there. If you are looking for a market with less competition as seller, you should really consider selling within the next year.
As a seller you may be tempted to believe that mortgage rates do not impact the selling of your house. Though they don’t have a direct impact on sellers, mortgage rates indirectly can impact sellers. If you aren’t aware, mortgage rates are at a historical low. I mean it’s pretty incredible that you could probably ask some people who bought houses in the 80s-90s and they would tell you about their rates in the high teens!
When mortgage rates are low, buyers feel more equipped to buy. They see it as an opportunity to bite the bullet because they will end up paying less in the long run versus a higher interest rate. How long will this under 5% rate last? It’s expected that we will see the rates continue to gradually rise this year. Does that mean it’s going to jump to 15%? No, that is unlikely. However, even a 1% increase impacts the buying power. A 1% increase in the interest rate means about a 10% increase for monthly mortgage payment for a 30 year mortgage.
For buyers who are really tight on a budget, that pushes them out of the market or into a lower price range. So, that may end up being less of a pool of buyers that could potentially buy your house if you wait for rates to increase.
Again, you may wonder how the income of others would impact you as the seller. When do people generally feel comfortable to spend money on the biggest purchase/investment of their life? The answer is likely to be that buyers will buy when they financially feel stable. This graph shows the percentage of wage gains (looking at median household incomes) or lack of over the years. When there’s a continuous positive wage gain, that means the demand for houses will likely continue too.
Now this graph may be in regard to new home sales (such as new builds/construction), however there is some value for resales in this. On average, houses in our market (specifically Gwinnett, GA) are in the mid-250s range. If you track the blue line, which represents houses sold for less than $300,000, you can see that it’s pretty low in comparison to the other two lines. With that being said, that means there are less new homes being built under $300,000. So if you have a resale especially if it’s only a few years old, that could definitely benefit you as a seller. Again, this goes back to a low inventory and high demand. Do you see the trend here?
Now you can see why if the simple thought of selling your house has even crossed your mind, you may want to go ahead and take that jump. If you have questions in relation to selling your home, such as what you could potentially net from the sale, finding your next home, or if you just want an idea of what you could sell your house for based on a comparative market analysis (CMA), then please let me know.
You can call/text me at 770.561.8899 or send me an e-mail at Loretta.Kartforosh@KW.com.
Disclaimer: Graphs were provided by Keller Williams Realty, Inc. Data was pulled from various sources for the graphs which is stated at the bottom of each graph.