Spring is here! This means sunnier days, warmer weather, and lots and lots of open houses and new homes on the market: it's real estate season! As we've been gearing up for spring and working with clients this winter, other agents and I have been noticing an interesting shift in perceptions on the market, and in the behavior of sellers and buyers. And, most interestingly, Days on Market for homes for sale are climbing pretty significantly, particularly in Bethesda. For a low inventory market, this is unusual! We'll explore this shift in this month's newsletter, as well as a surprisingly new market changer: Millennials. They've become my new favorite topic to complain talk about. They have many wonderful qualities: they are creative, ambitious, and they are definitely leaving their mark on the world. But just what kind of mark? Interestingly, a HUGE one that has implications all over the economy, and especially with real estate.
We tell you all about it in this month's market update. And if you ever want to chat about the market, what they're building in downtown Bethesda, or finding a place for that kid that's still in your basement, we're here for you and ready to help!
Enjoy the oncoming of Spring–we're celebrating it with you! It's selling time!
Josette, Mathew, & The MSM Team
(301)-395-9213 | josette@TheMSMTeam.com
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P.S. If you want to be a part of the spring selling season, it's already started! Call US today at 301-385-9213 to get the process started. We look forward to helping you achieve your goals!
Your March 2014 Market Update
The polar vortex and snow storms may have dampened the market by keeping some potential buyers inside, contributing to the lower closed sales and pending contracts. Despite this, seller activity continues to improve little by little and active listings are increasing. And there seems to be a bunch of shadow inventory of sellers waiting until spring to photograph and list their homes. The increasing sales prices may further encourage more potential sellers to list their properties. We're still touting the same old story though… inventory is tight! We've had a deep housing shortage in this area so more listings coming on are great, but we have a lot to make up for. And we're also witnessing a strange phenomenon that's changing the market in Bethesda…
The Higher You're Priced, The Less They're Enticed
We know low inventory and high demand equal a seller's market… only we've noticed a bunch of well-maintained and appropriately priced properties in the Bethesda area sitting on the market for unusually long periods of time. In a tight inventory market we expect supply and demand to push prices up and days on market down, making homes sell fast. So what's happening here? I dug into the data and, like we're always told in real estate, it all comes down to price.
Looking at data for homes sold in this area revealed that the average time a home sits on the market has been steadily increasing for months–it's now almost double the average days on market from this same time last year. But, in the table to the right, you can see that a quarter of the homes sold in Montgomery County in February sold within about a week of being listed, some even as soon as they came on the market! This changes the story: some homes are abiding by standard supply and demand and are selling fast, others are not–and the difference is in price.
I dug further into data for all the homes sold in the Bethesda/Chevy Chase area (zip codes 20814, 20815, 20816, and 20817) and the story is consistent. We know the homes in this area are valued comparatively higher than those in the surrounding DC/Montgomery County areas. And what we see is that homes listed in the higher price echelons–in the over $1 million range–were the ones that, on average, experienced longer days on market.
So why is this happening? It could be any number of reasons. Maybe the current pool of buyers looking for a home in this area fit a different mold are searching to meet different needs. Are they young, single first time home buyers? Are they young families wanting a specific school district? Are they move up buyers? Depending on who is making up the majority of buyers and where they are in their lives changes which homes are hot for competition, and which ones have to wait a little longer for the right buyer. The right type of homes that are well-priced and well-maintained will go quick, and this is what the data show.
For sellers, this means a few different things. First, price your home right! Ultimately YOU decide at which price to list your home and your agent is there to help you price it right. Listen to their market insight! Thinking you can list with the highest price and just negotiate your way down deters buyers from initially considering your home and is also not the right way to generate genuine buyer interest. To get serious buyers you have to be a serious seller, which means pricing your home right. Second, you might just have to wait. The data above is for homes that did sell–so higher priced homes are selling, it may just take longer for the right buyer to come. In the end, if your home isn't selling right away, it comes down to what you value more and where you're willing to compromise: a faster sale or a higher offer, neither of which can be guaranteed.
So, whether you're selling or buying, you have to know and keep in mind: What is important to you? Where do you want to be? And when do you want to be there? Then, with a great agent working for you, you can take the necessary steps to get to where you want to be.
Laden with Debt: The Millennial Threat
Millennials have been in the news a lot lately, and usually they're just a topic to endearingly tease and have fun with. After hearing Gary Keller's market predictions at the Keller Williams' Family Reunion conference in Phoenix last month and seeing changes in our local market, Millennials are now a topic I think we should talk about seriously! Laden with debt, Millennials are changing the real estate market and our economy.
Millennials are slowly entering the real estate market in search of areas closer to hip city centers. Those Millennials who have managed to get good paying jobs are moving out of their parents' basements and into the heart of vibrant areas. However, keep in mind that unemployment is twice as high for 20-somethings and 85% of college graduates end up living with their parents. This means the market is shifting in a very new and meaningful way.
First time home buyers make up about 40% of buyers in the market and 20-30 year olds have traditionally made up this demographic. The massive amounts of student debt Millennials are lugging around with them may prevent a large percentage of them from buying a home. First, they won't be able to afford one. Second, with their debt and increasing interest rates, it may be extremely difficult for Millennials to qualify for a loan to even try to afford one. Some people have referred to Millennials as the "Generation of Renters," and if this holds true, this will affect how homes will sell.
Entitlement, Too, Will End Up Costing You
Coupled with this financial reality is the rampant sense of entitlement this generation holds! Last month we told you to "Beware of the Corgis" and in line with this thinking, we think it's important for you to put yourself in the best position possible to get what you want.
Recently, another agent told me a story about a client who put an offer on a house they loved, but walked away from it because the seller refused to fix three broken outlets. They lost a house over three outlets! Such a frivolous detail! And in a low inventory market, if your offer is complicated with contingencies and demands on the seller, sellers will take the better offer and it probably won't be yours! Let the price this buyer paid for their sense of entitlement be a reminder to us all to know what we want and what we have to do to make it happen. If you're looking for a participation prize, you'll have to look elsewhere: the real estate market serves those who know how to ask and deliver for what they want!
And, like I always say, "Do you want to negotiate, or do you want to sell/buy a home?"
That's what's happening in your local real estate market this month! And by the way… We REALLY need more homes on the market for buyers! We have buyers we are working with that are pre-approved and need homes – who do you know who wants to sell their home right now?! Please let us know!
Stay warm, stay happy, and stay in touch! 🙂
About Josette
