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Applying The Breaks To The Market

It is the season for commencement speeches, diplomas, and caps thrown into the air to mark the end of a chapter and the beginning of something new. Similarly, this is the season where the robust, hot Spring Market comes to an end. Making way for the Summer Market.

While the Summer Market, may be a busy time of year for real estate; sellers, buyers, and real estate professionals feel a palpable shift. The active listing inventory slowly and methodically grows from now through mid-August. With an increase in listings, we also see an increase in the expected market time. Both inventory and time on the active market will increase through summer, and peak around mid-August.

The shift occurs because summer is full of distractions. From the beach, to the pool, to vacations, to managing children on summer break, the buyer’s attention is diverted a bit. Sellers, on the other hand, may find the most success if they take vacations and let their agent manage the showing schedule, rather than struggle to keep their home pristine and show-ready while their children are home. Both buyers and sellers want to close escrow before school starts and fall sets in, but planned summer activities are a priority.

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This spring we saw a hot seller’s market, with inventory flying off the active list with multiple offers. As more inventory enters the market, we will shift into a normal seller’s market. Sellers need to approach this shift with caution. Sellers who aggressively stretch their asking prices, risk not being successful and will miss the peak of the 2017 market.

Arbitrarily picking a desired sales price and ignoring neighborhood closed comparables is a recipe for disaster, and a waste of valuable market time. Rely on a licensed real estate agent to pull information for your specific neighborhood, and your specific home to find accurate pricing. We caution sellers and buyers to be weary of online real estate companies. Zillow admits that their “Zestimate® is a starting point in determining a homes’ value and is not an official appraisal”. Buyers and sellers are often mislead when they search the internet for valid real estate information.

The bottom line is that the market is slowly cooling right now, and finding success of closing escrow before school starts is narrowing. Sellers will find great success through accurate pricing. Buyers will find success by making their home search a priority, and submitting strong offers with solid price, terms and financing.

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Active listings increased by 236 homes in the past two weeks, which is a 4% increase. Expect inventory to continue to rise until the peak around mid-August. More homeowners come on the market in the month of June than any other time of the year. As more homes accumulate on the market, there is more seller competition.

Demand (the number of homes placed in escrow within the prior month) has dropped by 98 pending sales in the past month, or 3% and now totals 2914. In both 2015 and 2016, demand eclipsed the 3,000 mark for two months, compared to just two weeks this year. A major contributing factor to this year’s phenomenon is the lack of homes on the market in the lower price ranges ($300,000-$750,000). In the last 30 days there have been 21% fewer homes placed on the market below $500,000. The expected market time is between 53 to 58 days.

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The Steven Thomas Report

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