Another springtime means another run-up of inventory…we know sellers (and their Realtors and their Bankers) get very optimistic around this time of year. Listing inventory increases are expected. The discussion might include whether price increases should define the new homes coming onto the market.
Why would someone raise the price of their home? There are reasons and then there are good reasons. If your home is unique and there is nothing like it in the marketplace, you can ask almost anything you want for it. But remember the unique home is not for everybody. Prices, just like appraised values, are greatly influenced by comparable properties. What a home will sell for is usually a reflection of what similar homes have sold for in the recent past. If no home like yours has sold in the last year, what does that tell you?
Are recent home sales reflecting an increase in prices? That is very difficult to say. For the most part, prices still come down from Day 1 when a home is listed and when it sells. The percentage can range from 2 or 3 % all the way to 25 % or more for extreme examples. Case in point with a pending sale an agent friend is working on: first listed at $575K and now under contract at $425K. That difference represents 26%. The agreed upon sales price is 26% below the original asking price. Not all sales show this kind of drop off. Some were priced “to sell” from the beginning while others seem never to get into the right price category to attract interest.
The most recent Santa Fe residential real estate statistics posted here show a continued support for recent improvements in sales, while inventory sits well below that of 2 to 6 years ago. Some say we have a shortage of inventory. That is hard to explain when the rate of sales means it would take us a year to sell everything presently on the market.
Those experts we know and love say a balanced market means we might have about a 6 month inventory. So longer than that tells me its still a buyers market. The opposite, a sellers market, would be true if we had less than a 6 month supply of homes. But still there is chatter that we have a shortage of good inventory. Ah, this well may be true. True because the “good” homes sell first. So whatever snapshot you take of our inventory on any given day, the very best homes will sell in the next 30 days, then the next best and so on. If your home is in need of repair, has functional obsolescence and suffers from poor location, it will likely get passed over by buyer group after buyer group. Some of those issues can be changed, although not location.
The price range your home is in can also be changed. That is the single fastest way to sell a home in any condition or in any location. If you price it to sell, it will sell. Pardon me for stating the obvious. Many buyers are still focused on what they perceive as value and a “bargain” rather than the finest home at the fairest price. Some buyers would rather tell you they paid well below appraisal than tell you they love the home they bought. Shouldn’t you love living where you live? Or is that just a dream?
Please feel free to share any and all of the statistical charts and spreadsheets found on this blog/site. They are a lot of work and I do appreciate getting credit. Someone that knows the market and our trends and direction can be a valuable ally in your real estate business ventures. Personal home buying and selling is very important. So is taking a bite out of our investments available in the real estate arena. A tax write off for your bi-annual visits here makes some sense, when you think about it.