We all realize that the best time to sell anything is when demand for that item is high, and the supply of that item is limited. Two major reports released by the National Association of Realtors (NAR) revealed information that suggests that now is a great time to sell your house.
REALTORS® CONFIDENCE INDEX
Every month, NAR surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions.” This month, the index showed (again) that homebuying demand continued to outpace the supply of homes available in January.
The map below illustrates buyer demand broken down by state (the darker your state, the stronger demand there is).
In addition to revealing high demand, the index also shows that compared to conditions in the same month last year, seller traffic conditions were ‘weak’ in 22 states, ‘stable’ in 25 states, and ‘strong’ in only 4 states (Alaska, Nevada, North Dakota & Utah).
Takeaway: Demand for housing continues to be strong but supply is struggling to keep up, and this trend is likely to continue throughout 2018.
THE EXISTING HOME SALES REPORT
The most important data
revealed in the report was not sales but was instead the inventory of homes for
sale (supply). The report explained:
·
Total
housing inventory rose 4.1% from December to
1.52 million homes available for sale.
·
Unsold
inventory is 9.5% lower than a year ago, marking
the 32nd consecutive month with year-over-year declines.
·
This
represents a 3.4-month supply at
the current sales pace.
According to Lawrence Yun, Chief Economist at NAR:
“Another month of solid price gains underlines this ongoing
trend of strong demand and weak supply. The underproduction of single-family
homes over the last decade has played a predominant role in the current
inventory crisis that
is weighing on affordability.”
In real estate, there is a
guideline that often applies; when there is less than a 6-month supply of
inventory available, we are in a seller’s market and we will see appreciation.
Between 6-7 months is a neutral market, where prices will increase at the rate
of inflation. More than a 7-month supply means we are in a buyer’s market and
should expect depreciation in home values.
As we mentioned before, there
is currently a 3.4-month supply, and
houses are going under contract fast. The
Existing Home Sales Report shows that 43% of properties were on the market for less than a month
when sold.
In January, properties sold nationally
were typically on the market for 42 days. As Yun notes, this will continue unless
more listings come to the market.
“While the good news is that Realtors in most areas are
saying buyer traffic is even stronger than the beginning of last year, sales
failed to follow course and far lagged last January’s pace. It’s very clear that too many markets
right now are
becoming less affordable and desperately
need more new listings to
calm the speedy price growth.”
Takeaway: Inventory of homes for sale is still
well below the 6-month supply needed for a normal market and supply will ‘fail to catch up with demand’ if a ‘sizable’ supply does not enter the
market.
Bottom Line
If you are going to sell, now
may be the time to take advantage of the ready, willing, and able buyers that
are still out searching for your house.
By: KCM Crew
