Anyone who has watched the housing market in the last decade has noticed our market shift in many different ways. Well, surprise! It has shifted again. Just a few short years ago, the market was saturated with foreclosures and short sales, creating a buyers market and dragging home prices down. But what’s old is new again. Available inventory has reached it’s lowest point in years, and buyers are now fighting it out, trying to gain acceptance from sellers in what’s becoming a brutal marketplace. It also appears that cash is king, especially when coupled with 2-3 week escrow periods. Some buyers are finding that they have to write 3-4 offers before finally getting to a “YES.”
Four of our recent listings since the start of the new year went into escrow within weeks (sometimes days) of being put on the market. Three of those 4 went to buyers who paid all cash. But wait – it gets better! Three of those 4 were also sold above the asking price, with the highest selling for 10% over list (with more than one party competing for the privilege of paying that amount).
Couple the higher sales prices with the market being up more than 10% on it’s own, and it all adds to a great time to be a seller. All of our listings were priced at market value, meaning they were not underpriced simply to generate a flurry of offers.
The shortage of inventory has fomented the return of the bidding war, and as a result, prices are escalating. If your home hits the market now, it is likely to be viewed more, and seen with better consideration because of the lack of competing properties. That doesn’t even take into account interest rates that are still at a 40 year low. Money has never been cheaper to borrow – which is great news for you buyers. The only thing missing is something to actually BUY with that cheap money.
This is where homeowners who have been waiting on the sidelines come in. If you tried to sell a year or two ago and couldn’t get your price, or were afraid your home might not be worth enough for a standard sale, it is very well worth your time to take a fresh look at the new marketplace and see if now might be the right time to try again. Your value may very well have increased since you last analyzed it.
In July of 2012, a seller in Los Feliz tried to sell their home at $699,999, with no success – even after a $20,000 price reduction. In November, they pulled it off the market. This past January, they relisted it as a short sale (meaning it’s worth less than what’s owed on it) at $569,000. Soon after it came on the market and with 9 offers on the table, a bidding war for this house drove the price up to something close to it’s most recent 2012 asking price of $679,000, eliminating the need to short sale it. As Curbed LA (a great website for you real estate junkies) said, “just last month, this house was underwater. But look at it now, dry as a bone.”
The reduction in short sales and foreclosures on the market, combined with an overall decrease in inventory, has helped Los Angeles boast a 7.7% increase in home values over last year, according to the widely followed S&P/Case-Shiller indexes. According to the National Association Of Realtors, in January the national median sales price for a home increased 12.3% over January 2012, for the 11th straight month of annual increases, and the strongest gains since November 2005. In the west, that number jumps to a 26.6% increase over the same time last year.
Christopher Thornberg, founding principal at Beacon Economics, recently told the LA Times, “The question is, is it the real deal? Sure it is. It is driven of course by a very tight market … about as tight as it gets, and ultimately inventory drives prices.”
If you are thinking of selling your home or want to get a FREE Comparative Market Analysis (CMA) to learn the value of your home, give us a call or shoot us an email and we’ll be glad to help you.
Prospective Partners is Jefferson Hendrick and Rajeev Ahluwalia, operating under the umbrella of Keller Williams Realty. Jefferson and Rajeev have over 15 years combined experience in residential real estate sales. Reach them at 323-213-9362, or visit their website at www.prospectivepartnersRE.com.<!--EndFragment-->