Real Estate Market

July 2017 News

Housing Report

Note: National Association of Realtors® (NAR) data below is from May (most current national data)

National Association of Realtors® (NAR) data show a comeback in sales of existing homes in May after a decline in April. Meanwhile, low inventory levels helped boost the median sales price to a new high and shortened the median number of days a home is on the market to a new low. All major regions except for the Midwest saw an increase in sales in May.

Total sales of existing homes sales (transactions for single-family homes, townhomes, condominiums and co-ops), grew 1.1% to an annual rate of 5.62 million in May, up from 5.56 million in April. Last month's sales velocity is 2.7% higher than one year ago. 

  Existing Home Sales By Region
NAR's chief economist, Lawrence Yun, said sales action grew in May as more buyers surmounted the difficult market conditions seen in many areas. "The job market in most of the country is healthy and the recent downward trend in mortgage rates continues to keep buyer interest at a robust level," Yun said. The economist added, "Those able to close on a home last month are probably feeling both happy and relieved. Listings in the affordable price range are scarce, homes are coming off the market at an extremely fast pace and the prevalence of multiple offers in some markets are pushing prices higher."

Housing Data Takeaways

  • May's median price for existing US homes (all housing types) was $252,800. This outpaces last June ($247,600) as the new highest median sales price, representing a rise of 5.8 percent from May 2016 ($238,900) and marks 63 consecutive months of year-over-year gains.
     
  • Total US housing inventory at May's end rose 2.1% to 1.96 million existing homes available for sale, however, this is 8.4% below one year ago (2.14 million) and has dropped year-over-year for 24 straight months.  
     
  • Nationally, properties remained on the market for 27 days in May, down from 29 days in April and from 32 days at the same time last year. This is the shortest timeframe since NAR began tracking in May 2011.
     
  • Freddie Mac data indicates the average commitment rate for a 30-year, conventional, fixed-rate mortgage fell for the second month in a row, to 4.01% in May from 4.05% in April. For all of 2016, the average commitment rate was 3.65%.
     
  • First-time buyers drove 33% of May's US sales, down from 34% in April but above 30% a year ago. NAR's Profile of Home Buyers and Sellers for 2016 showed the annual share of first-time buyers was 35 percent.

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 -- resales 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.

Investing in Real Estate

Today's low interest rates and stabilized home prices have created some great investment opportunities! Investing in real estate has unique advantages over other types of investments:

  • Interest in mortgage loans are tax-deductible.  Investors can lower their tax liability while increasing their equity.
  • Renters pay down your mortgage loan.  Investors reap the benefits of rental income, which offsets your mortgage cost and build equity.
  • Real Estate values increase over the long term.  Real Estate is limited and will always be in demand. 
  • 1031 exchanges are available to defer taxable income when you are ready to sell.

Many investors are taking advantage of these great market conditions. Have questions? Give us a call. We are happy to help!