Hot, Normal, and Cold Markets
Real estate is local and here in our local market many people find it hard to believe that we are in a Hot Real Estate Market. Yes a hot market, contrary to what you hear in the media. Most media outlets talk about real estate nationally not locally.
Example, December 2010 (one of the slower months of the year) we had approximately 1700 homes for sale in Prince William County, Manassas, Manassas Park. In December the average days on market was 41 and the average sale price was $268,000 for homes in Prince William County, Manassas, Manassas Park.
Now six months later, June 2011 one of the busy times of the year there are approximately 1600 homes for sale in Prince William County, Manassas and Manassas Park, the average days on the market is 31 and the average sale price is now $289,000 approximate 9% increase since December 2010.
Based on the number of sold properties in the last 30 days we have approximately 3.5 months worth of inventory. Meaning that if not one more home got listed every home in Prince William County, Manassas, Manassas Park would be sold at the end of 3.5 months.
The home shown above is an example of a Hot Market. It sold in four days, with multiple offers at list price of $190,000. Six months prior homes in the same neighborhood sold in the range of $160,000-175,000.
Not sure what homes in your neighborhood are selling for? Request a Free comparative market analysis of your home.
This is an extremely competitive market and is advantageous to the seller. Sometimes, homes will sell as soon as they are listed or even before homes are listed. Typically, during a hot market, multiple offers will be made on each home and more often than not, homes will sell for more than the asking price. It is even more crucial to be prepared and to be ready as a buyer when the market is hot. It can be easy to get caught up in the bid for a home, but if you are prepared (pre-approved, solid in price range, realistic about your needs), it is easier to remain focused on your housing needs and price range.
In a normal market, there is a fairly large number of homes available and an average number of buyers. This market does not necessarily favor the buyer or the seller. A seller may not have as many offers on their home, but he or she may not be desperate to sell either. Again, it is the buyer’s responsibility to be prepared. During a normal market, the chances to negotiate are higher than in a hot market. As a buyer, you can expect to make offers at lower than the asking price and negotiate a price at least somewhat less than what the sellers are asking.
In a cold market, houses may be listed for more than a year and the prices of houses listed may drop considerably. This market is advantageous to the buyer. As a buyer, you have the time to make an offer that works to your best interest. It is not uncommon to low-ball and to find that sellers are accommodating to meet your needs. Keep in mind that even though this market is a great time for buyers, you do not want to lose your dream home by being unrealistic. Your goal is to get your dream home at the best possible price.