Being a Realtor means I have to keep my finger on the pulse of the housing market.
For the 16 years I’ve been in the business, I’ve been looking for signs. Signs that prices are rising, signs that prices are falling, signs that demand is growing and signs that demand is waning. I look at graphs, stats, and lender websites. I read articles, talk to my fellow Realtors, talk to home owners and potential buyers, I listen to ‘experts’, and I look at history, always looking for signs.
The problem is, the signs are always there, and you can read them in different ways.
Nationwide, mortgage rates are up. They have topped 5% for the first time since 2008. Days on market is up. The number of sales with multiple offers is down. In some areas, days on market is increasing. Prices on listed properties are being reduced. Those are facts.
As I often remind folks, there’s never been a time, regardless of the facts, that half the people didn’t think the market was healthy and the other thought we were in for a crash.
Even when prices started their recovery in 2012, the gloom-and-doomers were warning that it was only a temporary bump, that the worst was yet to come. 6 years later prices are, in some markets, at or above 2005-6 levels. Folsom’s average price per square foot for homes sold last month was $269. That’s only $2 from the peak price of $271, last seen in April 2006. Is that a sign that we’ve reached the top, and it can’t go any higher?
Predicting a decline in the housing market is much like predicting the end of the world; some day, you’ll be right.
That time, however, is not here.
Yes, there are changes afoot, but this is not the time to panic. In fact, panic is what could actually cause a crash. It’s not as bad as you think. Maybe it’s not bad at all.
Take, for example, the housing market in my beautiful little city of Folsom California.
If you look at homes for sale in Folsom today, you’ll find 109 active listings, and 47 of them have reduced their prices. The average days on market for these listings stands at 52. Since the average days on market for homes sold last month was only 20, this may seem like a sign of the apocalypse.
If we look at pending sales, we find something that points in the other direction. Of 73 currently pending, 31 of them sold in 10 days or less. Owners of those homes might have the opinion that it’s still a strong, seller’s market, and maybe even wondering if they sold too low.
The average list price for those was $620k. With the average sale price last month at $548k, doesn’t this look like a sign that prices are rising?
But wait, there are some pending that lowered their prices before they accepted an offer. Those averaged 55 days on market and an average price of $529k. A sign that prices are falling?
Overall, current pending sales average 27 days on market. A sign that the market is slowing?
Here’s my take on it. It doesn’t matter what direction the market is going, nor your price point. If you price your house right for the market, it’s going to sell in a reasonable amount of time. Sometimes the comps (comparable properties) suggest one price, but after getting it listed, the market thinks differently, and you don’t get any offers. If that happens, adjust your price. Don’t wait. As I always say, there’s nothing wrong with any house that a lower price won’t fix.
My last 3 closed sales and my 2 current pending averaged 5 days on market. On the other hand, I have a beautiful home listed at 785 Travis in Folsom, with comps at the time we listed, at about $789k. 94 days later, we’re still on the market, currently priced at $745k.
Rising interest rates, affordability, buyer fatigue, whatever you believe is the reason for a slow down, we are heading into winter, typically the time of year with the least amount of sales and inventory. Consult with a good local Realtor, and take a hard and realistic look at the numbers, and price accordingly.
With the slow down and price reductions, the gloom-and-doomers are starting to say, ‘See? I told you so!’ The thing that could make them right is if homeowners panic and start listing en masse, causing a glut of houses on the market, and then start dropping prices to beat the competition.
Let’s see what happens in the coming months.
Any questions? Drop me a line.
Steve Heard is a Realtor with Keller Williams Realty in Folsom CA, DRE#01368503
Steve can be reached at 916 718 9577 or email firstname.lastname@example.org