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The numbers for August are in, and they suggest that the market has, in fact, shifted.
I’ve noticed three things:
1. Our inventory has increased. Inventory increased by 22% year over year, which means if you’re selling your property and want to take advantage of the market, you’ve got to be in the top position in terms of price and condition. For buyers, it means you have more choices and less competition than you would have had just months ago.
2. The days on market is higher. This means that homes on the market are taking a little bit longer to sell. For example, in San Luis Obispo, we’re now up to 53 days on the market, where it was 38 days this time last year. This might have been a problem earlier in the year, but we understand that now that we’re approaching fall, it could take a little longer.
3. Prices are softening. In our service area just one year ago, we saw 163 price reductions. In just August of 2018, we’ve had 497—that’s more than three times what saw in 2017.
To be 100% clear, this is simply a normalization of the market, in which buyers have more time to make decisions and sellers are becoming more flexible. In my professional opinion, it’s more balanced and sustainable now.
If you have any questions, feel free to reach out to us anytime. We’d be glad to help.
As our market shifts, certain changes are taking place. As a home seller, there are three changes you need to be prepared for.
First, you’ll be competing with more sellers. Buyers have more homes to choose from, which means you won’t attract as many who are interested in your property. Because of this, it might take you longer to find the right buyer and sell.
Second, more sellers will have to adjust their prices or make investments to improve their homes in order to attract more buyers. Now more than ever, pricing your home correctly once you put it on the market is crucial to earning top dollar from its sale.
Third, sellers will have to be more responsive and more respectful to any buyers who come along. Six months ago, selling a home was like fishing in a pool full of fish. It didn’t matter if you caught one but it slipped off the hook while you reeled it in, because there were plenty still left. Now it’s more like there’s only one fish floating in the pool, so if you manage to get it on the line, you need to make sure you reel it in. If you manage to snag a buyer, you’ll have to work very hard and possibly compromise in order to get that buyer to close escrow and complete the home sale.
This situation may sound like a lot, but it’s simply a case of a normalizing market. What’s the upside of selling your home right now, though?
First, most home sellers will need to buy another house once they sell their current one, so if you get a little bit less from your home sale, you’ll make up for it once you buy.
If you plan on selling but you don’t plan on buying soon afterward and you’d rather rent instead, that’s fine too. Some experts are predicting that this shift will continue, so if you sell sooner, you’ll have more money in your pocket.
If you’d like to know more about this shift and how it affects you, don’t hesitate to give me a call or shoot me an email. I’d be happy to help you.
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What’s the latest news from our San Luis Obispo market?
Our team had a very good month this past June, and the marketplace as a whole had a good month as well. Compared to June 2017, the number of sales increased 6%. Aside from an increase in sales activity and closings, there was also an increase in new escrows. This means that July and August should have relatively good numbers as well.
Two noteworthy changes happened with the average days on market and the average price reduction for listed homes. Both of these numbers increased, which means homes are taking longer to sell and sellers are adjusting their prices more frequently to match what buyers are willing to pay, especially in the higher-end market above $1 million.
These trends are not unique to our area. Every week I talk on the phone with top agents from around the state about what is happening in the market, and I have found that this situation is happening both statewide and nationwide. We can expect this jump in activity to continue throughout the summer.
As always, if you have any questions about our market or are thinking about buying or selling a home, feel free to call or email me anytime. I would love to help you.
Recently a lot of people have approached me with concerns about their listing. They come to me and say, “Hal, my home has been on the market for five days and still hasn’t sold. What’s wrong?”
The truth is that there is no reason to worry. Our market is simply beginning to slow down from the hot pace we saw up until just a few months ago. Since that time, we have seen a change in the amount of time homes spend on the market, as well as how listings are priced.
To better illustrate this fact, let’s take a look at some recent market statistics.
We currently have 20% more homes for sale than we did last year. However, we also have seen 12% fewer sales. And while we did see a flicker in this trend, with there being 25% more home sales this month over last month, it is evident that we are headed toward a buyer’s market.
All of these conditions leave sellers with some important considerations to take into mind when strategizing their home sale. If you attempt to price your home based on listing trends from even just a couple of months ago, you are unlikely to see the same results as you would have at that time. A price that you and your agent think is fair may not seem so to a buyer.
But, while offers are lower and coming in less frequently than what was true in the past, today’s sellers should not panic. Our market is simply balancing out, and listing successfully is still possible.
So remember: When you do, at last, receive an offer on your listing, be sure to work closely with the buyer and be receptive to negotiation. Doing so will create a win-win situation for you and the person buying your home.
If you have an other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.
With April behind us, it’s time for our latest market update.
Most of the recent news about our real estate market has been optimistic. In any case, there are a few key statistics worth discussing.
Interest rates, in particular, have seen a significant increase since last year. This trend is expected to continue, but for now, rates are sitting in the high 4% range. And prices are also on the rise.
Moving on to another area of change in our general market area, we’ve seen a 20% year-over-year increase in inventory. Sales, on the other hand, have dropped, going down 12% year over year.
As a result of all of these factors, buyers are gaining more leverage. Of course, these statistics may vary slightly by location, and time will tell whether recent changes mark a true period of transition or just a blip in the market.
If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from you soon.
Today, I’d like to recap what happened in our February market.
The numbers we’re seeing right now are pretty consistent compared to this time last year. However, because our inventory is a little lower, we are seeing a lower sales volume this year compared to last year. That said, the average price for the month of February is significantly higher.
I pulled a few areas that stood out. For example, in Morro Bay, the average price for the seven sales we had this February was $783,000. Last year during the same period, the average price was $605,000, so that’s a 29% jump in the average price.
With seven home sales, you can have four high-end home sales, and that skews our average. So does that mean prices are up 29? No, that’s just one month. In general, though, we are seeing a pattern of increasing home prices and fewer sales.
In Paso Robles, the average price in February 2017 was $415,000. This year, the average price was $493,000, resulting in an 18% jump. That is over a large volume of sales, with 27 home sales last year compared to 21 this year. Again, there has been a slight drop in sales and a slightly higher price.
2018 should continue to be a solid market similar to last year. One of the main differences to pay attention to is interest rates. At this time last year, rates were around 4% for a 30-year loan. Today, they have gone up to 4.4% or 4.5% for a conventional loan of $453,000. That’s not a life-changing difference year to year; it’s only an extra $100 or $110 a month.
However, if interest rates continue to go up (which there is talk of), that could have an impact on affordability, which could affect the market and sales.
In general, our market is on a steady climb. There aren’t many homes available, so now is a good time to sell your home or buy one to lock in a low interest rate.
If you have any other questions about our real estate market, just give me a call or send me an email. I would be happy to help you!
The market stats for January are in. How did the January 2018 market compare to the market in January 2017?
In general, we have very low inventory. On average, inventory is down 5%. You have to be careful with averages, though. Someone once said, “If your feet are in the fire and your head is in the freezer, your average temperature might be okay, but does that reflect how you’re feeling?” Probably not.
On average, active listings in San Luis Obispo are down by about 20%. In Nipomo, active homes are up 47%, probably because they have had a lot of new inventory. That is an anomaly, but it does impact our average. In Arroyo Grande, active inventory is down by about 25%, and even Avila Beach is down 50%. We do a lot of sales with our Blue Heron office, and the Avila Beach market doesn’t have much for sale, and it’s a small market.
Sales are down as well, without a doubt due to the lack of inventory. If there were more properties to sell, there would be more sales. In Grover Beach, sales are down 60%. In Paso Robles, sales are down by 46%. If we had the homes on the market, there would be more sales.
Although inventory and sales are down, it varies depending on which area and price range you are in. If you have any questions about your specific area, just give me a call or send me an email. I’d be happy to help you.