We’ve all seen houses selling fast – what is the main takeaway? Buyers aren’t gaining any negotiating power.
College students may be flocking to Cancun, Mexico, or Panama City Beach, FL, but a look at preliminary realtor.com® data for March makes it clear that there’s no spring break anywhere on the horizon for the real estate market.
Instead, the buying season’s annual spring jump-start came about a month earlier than usual, with homes expected to hop off the market 22 days faster than last month, or 69 days. That’s eight days faster than last year. And that’s a lot.
“Calendars might say this is the first week of spring, but we’re already right in the thick of the most frenzied spring home-buying season on record,” said Javier Vivas, manager of economic research at realtor.com.
The realtor.com economic data team analyzed our data for the country’s largest metropolitan markets to find those where buyers are clicking up a storm on our listings and where homes are speeding off the market like they’re late for a flight to the islands. These markets may seem like a tough nut to crack for buyers, but homes there are likely to be a good investment.
Maintaining its perch atop the ranking for the second month in a row is the San Francisco Bay Area city of Vallejo, followed by San Francisco itself. Mind you, when we talk about these metropolitan markets, they typically include other satellite cities—the San Francisco market encompasses Oakland and Hayward, and No. 3 Dallas includes Fort Worth and Arlington.
New to the top 20 in March were Santa Cruz, CA; Fort Wayne, IN; and Grand Rapids and Ann Arbor in Michigan. Let’s check out the rest!
They said that houses nationwide are selling eight days faster than last year. Let’s compare our own local stats to March 2016, and include our hottest frenzy year, 2013, as well:
|Days on Market – March
In spite of this month’s NSDCC median sales price being 33% higher, and mortgage rates about 5/8% higher than they were in March, 2013, houses are selling faster!
Yesterday we saw how the average market time has been dropping. It might worry some buyers that it looks as crazy (or crazier) then back when the money was free and easy. Here are three frenzy quarters to compare:
There is some explanation – the process has changed, and probably improved, especially for sellers who recognize the benefits:
The MLS has been programmed for years to automatically send new listings by email to prospective buyers – but now it’s widespread. Every website offers auto-notifications, and buyers can set their own parameters/programs.
2. Electronic signatures.
By clicking a few spots on your phone, buyers are able to submit offers with great ease – and maybe too easy.
3. Photography is much improved.
Ten to twenty high-res photos provide a quality experience of the home instantly – and buyers expect to make important decisions off the photography. Some crafty agents use youtube video tours!
4. Comps have never mattered less.
Because the data is so available – buyers get tired of reviewing it, and think they know enough. Their ego wants to win a bidding war for once, and they end up making price decisions accordingly. They must – look at some of the sales prices that bear no resemblance to recent sales nearby.
5. Buyers get tired of losing, and step their game up.
Add coffee or an energy drink after losing out on a few good buys, and pretty soon offers are flying all over town. You could make a case that the process is moving too fast, and buyers not giving enough thought to what they are doing. Indeed, many just want to end the hunt.
It is best that you and your listing agent are well aware of how fast the market works, and can take advantage of it. Those who throw their listings onto the MLS, but then refuse to show the house for days or weeks are doing themselves a great disservice – because buyers forget, and move on quickly.
Be ready to sell in the first few days, and read the market signals correctly. If you are getting multiple showings and offers in the first week, it’s going the way it should. If you fight it, know that the urgency wears off after 7-10 days on the market, and you’ll be quite lonely.
You search and hunt for weeks or months (or years) and finally you secure a contract. You start thinking it’s almost over, but the critical juncture is the home inspection.
Once a buyer has a property tied up and in escrow, then they go back with an inspector to see what they bought. The inspection, and ensuing report, both tend to be lightweight, glossing over the minor items, and pointing out a few of the more-major concerns.
Buyers’ remorse starts setting in, and a list of repairs or credits is requested – but the listing agent poo-poos the concerns, and does little or nothing for the buyers.
Faced with the daunting task of having to go back to the hunt, buyers concede and wind up buying the house in spite of the flaws, big or small.
Buyers, and their agent, need to be proficient at recognizing the flaws from the beginning, and don’t get swept up in the excitement. It is likely that the sellers won’t do much for you later – and you want to make sure that the price you agree to in the beginning, adequately reflects the proper value.
The fast market is here to stay – and will probably get faster. Get good help!
Realtors including myself say that we have “low inventory”, but it’s not because fewer sellers are listing – it’s because the heavy demand is gobbling them up faster, and at higher prices:
NSDCC Listings and Sales between Jan 1 and May 15
The sales amounted to only a quarter of the total listings in 2009, and this year they are half!
We know that the higher-end market is sluggish at best (there are 713 active listings over $1M). Here’s a look at the UNDER-$1,000,000 markets:
NSDCC UNDER-$1,000,000 – Actives and Pendings/Contingents
|City or Area
On the street, it feels like the frenzy is slowing. But until the ACT/PEND ratios get closer to a more normal 2:1 (or at least 1:1), the UNDER-$1,000,000 market will continue to be very competitive.
The lowball season usually starts in June, but there are only 23 active listings under $1,000,000 that have been listed for more than 60 days (out of 184)!
For the daredevil sellers who recognize that this is an ideal time to sell, yet want to wait and see if the market will goose itself higher, what are the indicators to watch?
1. We’ve been tracking the NSDCC active inventory this year, and it hasn’t been growing much – the new listings that are coming on the market are being matched by new pendings. If the active inventory starts to grow, then we know that buyers are hesitating about the pricing.
2. The average-days-on-market is your buyer-desperation index. How quickly are homes flying off the market?
We have ramped up to warp speed currently, but if this starts to falter, you know that buyers are catching their breath about the pricing.
3. The number of sales is a great leading indicator, but their close date is actually 30-60 days past the decision date. New pendings aren’t that reliable either because they can fall-out.
Let’s just compare sales to the same average-days-on-market, and call the difference the desperation gap:
Sales are remarkably higher, and the average DOM is dropping sharply.
Let’s call the current condition the full-tilt boogie!
On a side note, it is refreshing to see that open houses – once the scorn of realtors who thought they were good for nothing – are now being utilized as the most effective way to expose a new listing to the market.
As my Dad would say, “Well, I’ll be darned!”.