August Market Update
Gone is the Summer of 2018, when almost any home, regardless of the condition, was being put on the market with immediate multiple offers. Sellers were able to essentially pick a price they thought they would be able to get, whether or not there was any past history at that price. Photos would go up, and calls would start. It was a GREAT time to be a Listing Agent, and a Seller. It was NOT the best time for Buyer’s, having to compete with multiple offers, having to basically give up any protections normally afforded to a buyer (waiving appraisal contingencies, paying for seller closing costs, etc). The market was bonkers. Agents who did not have much experience all of a sudden looked like seasoned pros, rock stars to their clients. But honestly, I like today’s market better.
Don’t get me wrong. 2019 is still, as I argue, a Seller’s Market. We are still seeing a high demand for homes, and homes are still selling quickly, just not as quickly as they did in 2018. But a lot of this has to do with Supply and Demand, more than anything. At the height of the market last summer, there were roughly 11,000 units (Homes, Townhomes, Condos, etc) for sale. At the beginning of 2018, we only had 7,500. This year, we peaked at over 13,000 units for sale in June, which was 4,500 MORE units available than in June of 2018. All of a sudden, things changed. Buyers had more opportunities. Mortgage rates were LOWER, giving Buyers more buying power. Sure, a seller just had to sell one home, not an entire community like a home builder, so as long as they got their price, they were happy. And they have been getting their price. Homes on average are still selling for 98.1% of their asking price, which is still considerably high, but not as high as last summer, when it peaked at just under 99.25% fo asking price!
For the last 13 months or so, home values have also been moving in a horizontal manner. We went from a few years running of close to double digit annual growth to about 3% in the last 12 months. 3% is normal people. 10+% was NOT! And while the Median Sales Price for Single Family Homes hit $305,000 in August, a level not seen since 2006, we have been in a range of $295,000 to $305,000 since May of 2018. That’s a 16 month period of relatively flat momentum. Don’t believe me? Take a look.
Median Sales Price: Single Family Residence only - 3 Year Chart
What does this mean? And more importantly, what does this mean to you, the reader? Allow me to dive into it a little more.
If you’re not selling, nor have any plan to sell or buy in the foreseeable future, this all means nothing to you, but I appreciate you reading my blog! I really do!
If you are planning to sell, and sell now, this is not a bad thing. While you’re less likely to set a record for sales in your community, and you may take longer than 18 minutes to sell your home, you’re still going to sell it, and you’re going to sell it relatively quickly, IF you price it well, allow showings, and are agreeable when it comes time to negotiating. You may not have a line of people waiting to see the home, but you will have ample traffic if your agent puts together a proper marketing plan for you. The average days on market is now about 46 days, way up from under 30 about a year ago. But you know what that difference is? 2-3 weeks. That’s it. You’re selling your house! This is not a stock investment that you can sell with the click of a button. It’s a home. So if you’re in Summerlin, and you price it well, you’ll move it quickly. If you’re in Mountains Edge, if you price it well, you’ll move it quickly. If you’re in Green Valley, if you price it well, you’ll move it quickly. Do you see the common denominator here?
PRICE MATTERS NOW MORE THAN LAST YEAR!
Sorry. It does. If you wanted to set records, you should have called me last year. But then again, the home after you would have broken your record, even if it was in inferior condition. That’s just the facts. At the end of the day, your home is worth MORE this year than it was last year, by about 3%. So you’re good. You held on, and made a little more equity. Congrats!
If you’re selling your home, and buying another home
If you want to buy, but need to sell your home, this is always a fun situation, but trust me, it’s easier this year than it was last year! That’s the good thing. However, you still have to be willing to play the game, and jump a little sooner than you were hoping. Last year, having a contingency sale accepted was very difficult unless your home was not only on the market, but in contract. That gave you as a buyer less time to identify a home, and you had to hope that your sale would not have any hiccups. We navigated these waters several times in 2018 successfully, but our clients had to definitely be willing to pay top dollar.
Now, if you need to sell in order to buy, you’re not competing against 15 other offers, so sellers are more willing to look at contingency sales. However you still need to be prepared. Your home, whether you want to or not, HAS TO BE ON THE MARKET to be taken seriously. Which means, we need to meet, discuss the price of the home, and get the professional photos done and ready to go. You need to be actively marketed for a seller to take you seriously. Do you have to take the first offer you get? Of course not, but you need to play the game if you want a seller to take your offer.
If you’re a buyer!
Congrats! There are about 20% more homes to look at now than last year. Mortgage rates have been fluctuating a lot, but they are generally lower than they were about 12 months ago, AND you do not have to compete with 15 offers. Sure, are homes getting multiple offers - yes, but not at the same rate as last year. The homes that are priced well are moving quickly, and remember, things are overall still selling for very close to asking price. If it’s listed for $400,000 and it’s worth $400,000 you’re not going to steal it for $385,000. Not happening. But a $395,000 clean offer may get you there with the right agent!
Remember - We’re Still in a Seller’s Market
But it’s changed. Historically, professionals would consider 6 months of inventory to be a neutral market. Any less would be a sellers market, any more would be a buyers market. How they track this is simple. Based on the velocity and volume of sales and the amount of inventory, it would be the total time taken to sell all the currently available inventory without adding new inventory.
I believe that 6 months as a neutral market is TOO long. I think 4.5 months is really, for the Las Vegas area, a Neutral market. At the beginning of 2018, we were sitting at only 2 months of inventory; very low. Again, the last time we hit the 2 months level was the end of 2006 and into the beginning of 2007. We’re currently sitting at 3.2 months, up from last year, but actually down a bit this summer, which is normal. I would anticipate seeing our inventory levels continue to drop as we end the year, as is relatively normal for seasonality, but I don’t see us approaching 2 months again; perhaps 2.8 or 3.0 months of inventory. But even with this adjustment, if you ask me, we’re still in a Sellers Market, albeit a more balanced one than last year!
Disagree with anything? I would love to hear what your thoughts are!