Usually every Monday morning here at Raleigh Real Estate Talk I give you a nice chart with the weekly stats for the local real estate market. I’m going to skip that today and try to answer some of the questions I get in my email on a regular basis. The buying and selling public seems to be uncertain about the future of real estate markets across the country. In some areas uncertainty is understandable. I don’t believe you have to live with that uncertainty here.
Inventory is rising, but being absorbed
I just checked active listings for Wake County. There are 8,389 homes listed for sale. Last year this time there were 6,537. That’s a 28% increase. Is that good or bad? To answer that question you need context.
The correct context for this question is found by considering the absorption rate. The absorption rate is the number of months that it would take to sell all listed homes if no more were placed on the market and the volume of sales remained steady. That rate is currently 4.9 months. Last year it was 3.7 months.
Last year I was having trouble finding the right home for some of my buyers. When I did, many times we found ourselves in a bidding situation. Now, there seems to be a lot more choices for buyers.
Sellers may have to wait another 30–60 days to sell their home if it is not adequately prepared. If it is prepared as I have suggested in a past article, the home could sell in a few weeks.
The National Association of Realtors (NAR) and most economists will tell you that over 6 months of inventory is a buyer’s market. We’re not there yet, but we’ve moved in that direction.
Sales have slowed
Sales are down 32% from last year. Sounds alarming doesn’t it? Just remember the absorption rate. At 4.9 months we’re doing okay. In September 1,204 homes sold in Wake County.
This number is more like a healthy January or February number, so sales are definitely off the mark. I’m sticking to my theory about relocation clients not being able to buy here because they cannot sell their homes in other markets. I think this has had a huge impact.
Again, for buyers there is more selection and less chance of getting in a bidding situation. For sellers you need better preparation and targeted marketing more so than last year.
Prices are appreciating nicely
August average sell prices are up 4% year-over-year. The Raleigh area market has maintained a healthy 3–5% appreciation for a long time. Looks like we’re right on track, doesn’t it? Economists will tell you that residential real estate prices should track just ahead of inflation and that’s what we consistently do.
By the way, later this week I’m going to a presentation by Stacy Anfindsen, publisher of the TARR Report. Stacy is a very well respected local expert on market trends and the TARR Report is the premier publication that the local Realtors use to help understand those trends. Stacy will be speaking at an annual market trends conference at our local Board of Realtors this week. I’ll be sure to let you know what he shares with us, especially regarding appreciation.
Price must be based on the competition
Putting a sign in the yard and listing on the MLS doesn’t cut it these days. Inventory levels are up and if you want to sell your home quickly, in addition to preparation and staging, pricing it to beat the competition is critical.
When sales are down and inventory is up, the line to be the next to sell can be a long one, if you are not well prepared. If you want to move to the front of this line, it’s possible, and easier than you might think. Check out this article I wrote about how to do just that.
Sellers have to be smart and buyers have choices
You see, I think this is a great market. Selling homes, in a reasonable time frame, has become more of a challenge. I love challenges and this give me a chance to really shine with my market and pricing skills. I can add more value for sellers now and quite frankly, that’s a very rewarding feeling.
Buyers want a great home. I get to use my knowledge of neighborhoods and communities to put you in the best possible home. A good amount of inventory really helps make this possible. This also makes me feel good about what I do.
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