Hello Again! We're back to fill you in on the latest in MoCo real estate! I’m sure you’ve seen headlines in the newspapers about how weak the D.C. area housing market was last month. Agents have been attributing slow sales to everything from the holiday slumber to icy sidewalks and the weather. While it’s true—you know from my updates over the past few months that our area faces a shortage in housing inventory—I don’t think we can blame the weather on this! (Even though the skies just dumped a foot of snow on us!)
If the ice melts, will we suddenly have more homes on the market? No! And if families have deadlines to meet in terms of selling or buying a home, will they find a way make to make it happen? Absolutely! We’re past the times where we wait on the weather to make decisions. On the surface, January and the beginning of February seem to have been sleepy months in local real estate; working with sellers and buyers recently has shown me otherwise. Here’s your February 2014 MoCo Market update and peek into what’s happening beneath the surface.
Your February 2014 Market Update
So the weather does account for some sluggishness in the market; it's a seasonal trend we witness year after year. Buyers who aren't seriously motivated may not make the trek out to Gaithersburg for an open house if there's icy sidewalks and roads. However, keep in mind that sidewalks can be salted, ice melts, and if people are serious to sell or buy a home, they make it happen. And they've been making it happen all throughout this winter. Inventory has been especially low, and it's a bit of an unusual time for the market in this area, but I think for reasons other than just the weather.
My experience with sellers and buyers in January and February has been that there are a lot of transactions happening, they’re just happening faster and at the pre-market level. For example, I just helped a family sell their home within a matter of a week and never even listed the home on the MLS. I sent out word in the Top Agent Network and other pre-MLS groups that I had a fabulous home for sale, we were looking for a certain price, and invited interested parties to stop by and take a look at the house. The family received an all cash deal at asking price, and was able to use that signed contract to fortify an offer they had put on a house they wanted to buy. It was a quick and simple transaction where everyone got what they wanted. I came away from this with a few lessons:
First, you never know what is motivating people to buy or sell a home. This means you can't wait around for prices or people to change. You have to know what you want and go for it! I often joke saying, "Beware of the corgis!" based on an experience where I had buyers miss the opportunity to put on offer on a home they loved because they thought they could get a deal by making the sellers wait and reduce the price. Little did they know, a family with two corgis (adorable tiny dogs) desperately needed a home without stairwells (those stumpy little legs couldn't get up and down their stairs!)–and this was such a home. They put in an offer far above asking price and it was theirs! And when spectacular walks in the door, do you really think anyone will ask it to wait for something less? So whether it's a home for corgis, a school district for a deaf child, being closer to an elderly family member–you never know what is motivating people, what they value, and how much they do. You can't afford to rely on other people's decisions! And if you hesitate too long on what you want, you may find yourself in a position competing against corgis!
Second, with more private sales happening the general public often doesn't even have the chance to see a home for sale, much less make an offer on one. It may seem counter-intuitive: why wouldn't a seller let their house get as much market play as possible to ensure they get the best possible price? Well, just like the corgis were the hidden party behind that transaction, price isn't the only thing that motivates sellers. A tight and quick transaction may be more valuable to them than a few extra dollars while their home sits on market. And if work needs to be done to a home, just getting a home sold without having to invest in making upgrades and repairs can be a huge relief to sellers. This is just another factor that's influencing the market because these homes sell before they even get on the market, keeping the number of active listings low. There's a lot of activity taking place that most of the public doesn't see. And this is where having a great agent privy to a professional pre-market network can make all the difference!
Another factor that's keeping listings from the market is the tight inventory itself. If a seller wants to sell their home, they most likely need another one to move into! And inventory is tight! So while sellers are in a great position because the market is in their favor, they're also out there competing against all the other buyers looking for a home. Sellers who need to sell AND buy are in a sticky situation which is being reflected in the market as sluggish activity. Demand is definitely there, it's just a matter of getting supply to match it. With the upcoming spring we do expect more homes to come on the market and equilibrate the market. So if you're looking to sell or buy a home in the spring, I'd suggest getting ready now!
Third, having a great agent can be an invaluable resource, especially when inventory is tight. As an agent in the top 10% of local producers, I have access to pre-MLS groups where I can routinely network with other top agents in the area and ensure I hear about upcoming inventory. So how is this important to you? You get an edge. As a buyer, I give you the chance to get into homes before the general public. You don't have to wait for photos on the MLS, you don't have to wait for a home to even go on the market. And if you're a serious, motivated buyer, you'll jump on this opportunity. because it gives you the chance to put in an offer and make a home yours without having to compete against other buyers! And as a seller, you get an idea of what people are willing to pay for your home upfront before you invest in taking photos or making repairs. We can figure out what ends up benefiting you most in terms of time, energy, and money. There's one crucial component though: I can arrange these opportunities for you, but it's up to YOU to take it! A market like ours does not allow room for hesitation. If you want to make an offer on a pre-market home, make them an offer they can't refuse. Give them spectacular. Give them an offer crafted exactly as they want it and the home is most certainly yours. But once it's on the market, your advantage is gone.
So tight inventory teaches us to (1) Beware of the Corgis! Don't rely on other people's motivations to define yours; (2) Choose an agent who gives you an advantage in the market so you're in the best position to compete for what you want; and (3) Know what you want and go for it!
Now for the Numbers…
- Median sold price was $852,500, a 18% decrease compared to last month and a 1.4% increase from January 2013
- There was a 57.1% month over month increase in new contract activity with 11 new pendings;no MoM change in all pendings (new contracts + contracts carried over from December) with 14;
- and a 15.4% increase in supply to 15 active units.
- This activity resulted in a contract ratio of 0.93 pendings per active listing, down from 1.08 in December and is 42% higher than the 5-year January average. A higher Contract Ratio signifies a relative increase in contract activity compared to supply, and indicates the market is moving in the seller's favor.
For Bethesda condos:
- Median sold price was $627,500 in January, an increase of 64.1% compared to last month and an increase of 172.8% from January 2013.
- There was a 25% MoM decrease in new contract activity with 3 New Pendings;
- a 20% MoM decrease in All Pendings to 4;
- and a 28.6% decrease in supply to 5 active units.
- This activity resulted in a Contract Ratio of 0.80 pendings per active listing, 29% higher than the 5-year January average.
Nationally, the housing market has shown some weakness in the final months of the year with existing and pending home sales at lower levels than in prior year. However, new home sales and housing starts are rising, although they continue to be historically low. Despite this mixed performance, overall 2013 housing market performance has improved relative to 2012 and the improvement is expected to continue as we see builder confidence continuing to increase.
I know so many people who tell me they chose to work with a specific agent because "they know my street!" Being in the industry and seeing the number of homes that end up sitting on market for months or even are withdrawn or expire, I wanted to take a moment to share with you a few words on the so-called "neighborhood expert" when it comes to real estate.
There are some agents who choose to market themselves in one area and they often promote themselves as "the neighborhood expert." You know who they are: they're the ones you see in your mailbox every week, the ones with the signs in your neighbors' lawns. They're the ones who tell you that you should trust them to sell your home because "they know your street." And I'm sure they do! Yet, what we also know is the buyer for your home probably isn’t coming from inside your neighborhood, right? We also know that all realtors have the same access to the information on the MLS. And the length of time a "FOR SALE" sign sits in a lawn indicates how well–or how poorly–an agent is serving their client. If you see signs that sit for months and months, this indicates that maybe not everything is being done to get that home sold in a timely manner.
Why wouldn't an agent do everything to get a home sold? Well, for one, having their sign in your yard is free advertising for an agent! The longer it sits, the more people will see it. Often, this is an easy way for agents to get new buyer clients who see the sign and call the agent for information. If your home doesn't end up meeting their criteria for a home, the agent still keeps them as a client while your home continues to sit on the market. Also keep in mind that the average agent only handles 4 transactions a year. Consider how much expertise an agent can have in successfully navigating the complexities of selling a home if they only do it a few times a year!
With that, it’s important to choose a listing agent who has a wider scope of the city. Research shows that 90% of buyers start their home search on the Internet. That's why we maintain our strong Internet presence on BethesdaBuzz.com so buyers look to us for information on a home. If your primary goal is to find a buyer for your home, having an agent who is experienced in both listing homes and has a database of buyers waiting to buy would put you ahead of the game, wouldn't you agree? I know the ins and outs of Bethesda and Montgomery like the back of my hand, but when you hire me you get more than a neighborhood expert, you get someone who specializes in putting buyers and homes together wherever they may be. My job isn't just to know the area statistics, my job is to market and find the right buyers for a home. So once we are working together we’ll find that perfect buyer and get you to wherever you want to. And that’s exactly what this whole process is about anyway, right?
That's it for this month! Stay warm, be safe, and we'll be in touch!
By the way… if there's anyone in your life who's thinking of selling or buying a home, we'd love the opportunity to serve them! Call me at (301) 385-9213 or send me an email to get us connected!
About Josette
