Real Estate Market

March 2020

U.S. Real Estate Overview

Note: January 2020 data below are the most recent released by the National Association of Realtors.

Existing-home sales declined in January, continuing a fluctuating pattern of monthly increases and declines, according to the National Association of Realtors®. Significant declines in the West region dragged down nationwide numbers, with the other three major U.S. regions reporting marginal – or no – changes last month.

Total existing-home sales (transactions that include single-family homes, townhomes, condominiums and co-ops) decreased 1.3% from December to a seasonally-adjusted annual rate of 5.46 million in January. However, for the second straight month, overall sales substantially increased year-over-year, up 9.6% from a year ago (4.98 million in January 2019).

National Association of Realtors January 2020 DataLawrence Yun, NAR’s chief economist, finds the outlook for 2020 home sales promising despite the drop in January. “Existing-home sales are off to a strong start at 5.46 million.” Yun said. “The trend line for housing starts is increasing and showing steady improvement, which should ultimately lead to more home sales.”

The median existing-home price for all housing types in December was $266,300, up 6.8% from January 2019 ($249,400), as prices increased in every region. January’s price increase marks 95 straight months of year-over-year gains. “Mortgage rates have helped with affordability, but it is supply conditions that are driving price growth,” Yun said.

Total housing inventory at the end of January totaled 1.42 million units, up 2.2% from December, but down 10.7% from one year ago (1.59 million). The housing inventory level for January is the lowest level since 1999. Unsold inventory sits at a 3.1-month supply at the current sales pace, up from the 3.0-month figure recorded in December and down from the 3.8-month figure recorded in January 2019.

Properties typically remained on the market for for 43 days in January, seasonally up from 41 days in December, but down from 49 days in January 2019. Forty-two percent of homes sold in January 2020 were on the market for less than a month.

First-time buyers were responsible for First-time buyers were responsible for 32% of sales in January, up from 31% in December and up from 29% in January 2019.  NAR’s 2019 Profile of Home Buyers and Sellers – released in late 2019 – revealed that the annual share of first-time buyers was 33%.

Individual investors or second-home buyers, who account for many cash sales, purchased 17% of homes in January, equal to December 2019 and up slightly from 16% in January 2019. All-cash sales accounted for 21% of transactions in January, up from 20% in December but down from 23% in January 2019.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 3.62% in January, down from 3.72% in December. One year ago, the commitment rate was 4.46%.

“We are hopeful and also confident that home sales will improve this year,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, Calif. “NAR has and will continue to do its part in the industry, reiterating the social and economic benefits of homeownership and advancing conversations surrounding housing affordability concerns.”

 

The price is right... Or is it?

Dining room view of home listingIf you are planning to put your home on the market -- especially if you live in a place where prices are rising and buyers are competing for homes -- it can be tempting to list your property at a high price hoping that you'll actually get it. After all, it can work with cars, why not with homes?

You may want to think twice -- the resale of homes and automobiles are very different things.

Experienced Realtors who have been through dozens, scores, or even hundreds of transactions, will advise you to price your home appropriately from the outset because it's pivotal to seeing the home sold quickly and at the best price. Research backs up what experienced Realtors already know: overpricing your home and then lowering the price a few times most often leads to a final sales price significantly below what you originally should have asked for it.

And, to make matters worse, the longer a home remains on the market, the deeper the discount is likely to be off the original price. Ouch!

How to price your home correctly

Many homeowners seek to price their home based on factors like the price they paid for it, the balance that they currently owe, or simply on the profit they need to buy another house or to meet their financial goals. These motivations are perfectly understandable but in reality the value of your home is what the market will bear. Here's the problem: If a property is overpriced, some potential buyers will avoid looking at it at all (and having no one show up to see it is a pretty clear message from the market). Others may view the home but walk away without making an offer.

So, what can you do? Choose a Realtor who can provide you with the best comparative market analysis (CMA) and who understands your local area intimately. Some agents may attempt to woo you with an inflated price -- it probably happens every day somewhere -- but in the end the market will speak clearly, and choosing an experienced Realtor who understands the importance of market-driven pricing will end up being a choice you won't regret.

Your Realtor's CMA should include sales prices for similar properties nearby that have sold recently, prices for currently listed homes (these will be your competition), and prices of homes that were taken off the market because they didn’t sell. Look for a Realtor with demonstrated experience who can factor in a range of local market issues to produce that all-important first price.

If the price is right from the beginning, it usually means not only a faster sale, it typically means more money in your pocket.

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