If you take time to sleep on it, then you probably won’t sleep in it!Low Inventory: The Big Real Estate Story Of 2013
Inventory in the local real estate market continues to drop as more homes are sold and less are being added to the market. Depending on the price point, we have generally moved to a “sellers market” as sales continue to be very active in 2013.
You can search Facebook, Twitter including the big national real estate resources and the story will be the same: Low Inventory in the housing market! The low inventory situation exists in both major cities and some suburban areas.
The number of homes listed for sale increased by just 1.6 percent in March from February, according to the NAR (National Association of Realtors), but supplies are still 17 percent below where they were a year ago. Realtors usually see listings swell by about 100,000 in March, but this year they saw just 30,000 more.
Who would have thought that inventory would be so low in some price ranges when just a few short years ago inventory was at an all time high. It seems like there are some price ranges where the days on market is ZERO, because the day it hits the market it has multiple offers on it.
One such story is of my recent buyers, we’ll call them Bob and Sally, came to me in search of their first home. They have two small children and have been saving consistently to buy a home. “We’re ready”, they said, “so help us find our first home”. We pile in the car and off we go. After viewing a few homes we find one that fits the bill and the offer goes in. To our surprise, there are 6 other offers the very same day. Needless to say, we did not beat the newly discovered competition.
Next house, same thing, four offers and so we up our offer to a full price offer, still no luck. Lastly, the third house went under contract before the sign was in the yard. Now we are bidding well over listing (I like to call this funny money) since it will still have to appraise. Making an overpriced offer may result in a contract but the house still has to appraise. Low Inventory Does Not Equate to ANY PRICE I WANT TO LIST AT!
Long story short, my buyers are still searching for their home and a reasonable offer.
Weak supplies are pushing home prices up far faster than wage growth, which is keeping first-time buyers especially on the sidelines. Home sales have been “stuck” according to Lawrence Yun, Chief economist for the National Association of Realtors, because there is just not much out there to buy.
Inventories are tightest on the low end of the market, where investors came in and bought most of the distressed properties and are now holding them as single-family rentals. There is about a four-month supply of homes priced under $100,000, while there is around a 12-month supply of homes priced over $500,000. That's why sales of those low-end homes are down 16 percent from a year ago, and sales of higher-end homes are up 25 percent, according to the NAR.
My advice to home sellers who are ready to list – keep your price within the comparables so your appraisal will be successful. What you don’t want to see happen is a lost buyer because your home would not appraise at the amount offered.
For buyers, stay within your budget and be patient, don’t get sucked into the “auction” mentality and overpay for your home. But remember, if you take time to sleep on it, then you probably won’t sleep in it!
The last thing an agent wants to do is to tell a buyer that it’s time to compromise, but as the great theologian Bob Dylan would say, “the times they are a changing” and reality is that even though there are still some great homes available out there, buyer’s can’t afford to be too picky because the window of opportunity is narrowing more every day.
As inventory shrinks, agents are looking at other than the traditional methods to find a home for their clients.“Knock, knock, who’s there?” So don’t be surprised to find a Real Estate agent knocking at your door asking if you would like to sell your home. I know I have already started my door knocking campaign to find Bob and Sally their new home. If you are ready to sell your home, I would love the opportunity to interview for the job!