Are Prices Starting to Rise?

As with many things, prices are local--very local. In addition, price indices are rarely apples-to-apples comparisons.  They usually take prices on one date and compare them to prices as a whole on another date.  For example, the Case-Shiller Index actually takes the total sales of all the property in a city and compares it to the total value of the property sold in that city in an earlier period, to calculate the rise or fall of real estate values over a period of time.  That means that it's hard to know what would happen to one specific property when it got sold or resold.

In the current market, sales are being driven by first-time homebuyers and are strongest at the low end of the price spectrum.  Overall, prices are flat or still falling slightly, although this does lag in time, due to reporting delays.  However, we are beginning to see appraisal problems again, which had not been occurring in recent months.  That indicates that prices are rising, thereby pushing up sales prices above levels of past reported sales, which are used by appraisers to calculate value.

What's the bottom line?  Prices at the lower end are being squeezed by supply and demand factors, and are probably heading up.  Higher-end sales are still waiting for that phenomenon to take place.

Activity Abounds

Finally, spring has sprung, and the real estate market has responded.  I hear stories every day about listings that have sold in one day, listings that have not sold for two years and now have two offers in one week, listings that    are having showings right and left, and buyers that are finally moving off the fence.

The market continues to be driven by first-time homebuyers, and there are still people moving here from other places that are choosing to rent before buying, but the activity is clearly on the upswing, and there is much more of a sense that things are beginning to recover.  While we have more inventory than many other regions of the country, even we are seeing quick turnover in some neighborhoods and price ranges.  For instance, Guilford still has 275 homes on the market, which is a 50% increase over last year, but houses are selling quickly there when they come onto MLS.  East Rock in New Haven has 30 houses for sale, but one of our agents just sold one in a single day.

Have you been waiting for the market to turn so that you could buy or sell?  Have you been waiting for prices to bottom out?  Have you just been waiting?  Wait no more.  The time is now!

Playing the Odds

We were doing some research this week, and were startled to discover that, from January 2010 through the present date, only one-third of all listings taken have sold.  That means that, for every seller who put his or her home on the market and sold it, two sellers put their homes on and nothing happened.  If you add those people who haven't bothered to list their properties due to the poor selling climate, there is a big supply out there. 

Since real estate agents work solely on commission, this is obviously a troubling state of affairs.  We only get paid one out of every three times we list a home, and listing always used to be the guaranteed way to make money, since the percentage of buyers who look and don't buy is higher than that of sellers who don't sell.  The combination is deadly.

 It does prove, however, that sellers should be listening to their agents about the price and improvements necessary to attract an offer in today's market.  What's the point of cleaning everything up and making plans to move, only to sit there for two years without a sale?  If you do want to sell, you need to do more than just sign a listing--you actually need to have a property in the top third of all properties, in order to sell it.  That's food for thought.