April 2016

In my last report, it was clear that a slight market shift or market correction was evident. According to SFAR sales data, the trend continues as March 2016 reflects:

  • Single digit growth, year on year at 8.6% for single-family homes. Not the double-digit growth we’ve seen in recent years.
  • Condos/Townhomes are flat at 0% growth year on year.
  • The overall residential growth is less than 4%. Again, not the double-digit growth we’ve seen in recent years.
  • Longer days on market for listed properties.
  • We’re also seeing many more price reductions. Pricing strategies that worked as soon as 6 months ago, may not be valid today.
  • While selling prices are averaging above list price, the actual percentage above list price is down. Buyers are sensing the shift towards possibly being in the drivers seat in many cases.
  • We’re also seeing the number of offers down on average. Properties that were garnering 3-6 offers a year ago, may only be seeing 1 or two today. Sometimes, NO offers, hence the rise in price reductions.
  • Months of supply are up to 2 months. A healthy market is about a 6-month supply, so the trend is moving in favor of the buyer.

The Big Take Away

Buyers should be dancing in the streets, as some sanity may be entering the equation. To be clear, there is no major market implosion afoot, so buyers should not get to over-confident. Pretty house on pretty streets in great school districts will always sell quickly. However, combine these current shifts with historically low interest rates and buyers should be in turbo-mode, visiting as many properties as possible as they may finally be moving towards the drivers seat. Do it now before the Fed raises rates this summer.

Homeowners should be seriously considering selling strategies before the upcoming summer slow-down. One such strategy is how to defer capital gain tax and I have resources to assist with that. To be clear there is no imminent real estate market crash, however one must ask if the current market shift represent the calm before the storm (?). Some industry pundits have predicted a market correction of as much as 20% in 2016. At a current average selling price of $1.2Mfor a single family home, that could be as much as $240K out of your pocket if those predictions come true. As a seller, do not forget that the Fed has also promised to increase interest rates by the summer which will make all homes more expensive to buy, thus possibly slowing the market even more.

I trust you’ll find this information useful, and I encourage you to share it with friends, family and colleagues. Let’s meet soon to discuss your current and future real estate aspirations.  Whether a seller or buyer, I will put you in the best possible position to maximize your investment(s), contributing to your immediate and long-term wealth.

Dino Virella