Wednesday, May 10, 2017

Where Is Our Crazy Market Headed?

Our market is favoring sellers, but buyers should be careful to avoid overzealous buying.

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Is this a crazy time in the Lane County real estate world or what?

As you probably know, back in February we only had 1.9 months of inventory, which means at that rate of consumption, we’d be out of properties in 1.9 months. To give you some perspective, six months is considered a balanced level of inventory between buyers and sellers. 1.9 months was not a good number, but I got encouraged when it shot up to 2.2 months in March. This means we’re getting more listings, which will help the market. 

There is a huge demand from buyers right now, and the market needs more inventory. Otherwise, prices will continue to skyrocket for the lower-end properties. I’ve gotten calls from several sellers lately asking me if I could sell their house at a great price. My response to them was that I could, but only if they priced it right first. If you price a property correctly, it should sell easily and quite possibly generate multiple offers in doing so. If you price it above its value because you think the market will support it, it won’t.

There is a huge demand for buyers right now, and our market needs more inventory.

How do you price your home correctly? 

You need to confer with your Realtor and have them do a comparative market analysis of homes that have sold recently that are similar to yours to give you a legitimate price point basis. If you price your home high and it doesn’t sell right away, you’ll have to lower the price. After that, your home will become a stale listing in this market. For example, if you price your home at $275,000 or lower, there will be high demand for it. If you price it higher than that, your pool of potential buyers will be much smaller. 

On the buyer’s side, I want to warn you about overzealous buying. Right now, many homes listed in the $225,000 to $250,000 price range are receiving multiple offers. The problem with this is each buyer is trying to position themselves higher than the other by putting in escalation clauses in their offers, which means they’ll pay more than the highest competing offer up to a certain price. The danger here is that this drives prices up and may cause you to overpay for a home.

If you’re a buyer of an entry-level home, be patient for the next couple of months because the recent surge in demand should cease. Don’t wait too long though, because interest rates may go up. If you’re a seller, don’t get greedy. 

If you have any questions about our market or are looking to buy or sell a home, don’t hesitate to give me a call. I’d be glad to help.