Wednesday, July 12, 2006

Market Balance




RISMEDIA, July 10, 2006—Three months ago, HouseHunt’s “Current Market Conditions” survey showed that the overall U.S. housing market was close to a rare balance between buyer demand and seller supply for the first time in eight years. HouseHunt’s latest quarterly survey shows that equilibrium has been achieved: 41 percent of member agents said more buyers than sellers; 40 percent said more sellers than buyers; and 19 percent reported a 50/50 balance.

Most notable exceptions are in the Northeast, the Chicago metro area, and in the Western states. Home buyers outnumber sellers by considerable margins in Chicago and the West, while sellers outnumber buyers in the Northeast.

Additional proof of a balanced national market between buyers and sellers are reported by the National Association of Realtors, which estimated a 6.5 month supply of unsold homes in its May report. An inventory supply of 5.5 to 6.0 months is considered to be balanced.

HouseHunt’s second quarter national survey also found:

Fifty-six percent of member agents said it is now taking, on average, more than 60 days from listing to contract to sell a house. This is up from 55 percent in the first quarter and 35 percent a year ago. Twenty-eight percent said it is taking more than 90 days to contract. Only 15 percent of existing homes are selling in 30 days or less.

Housing inventories are continuing to increase: 86 percent now report a good supply in virtually all price ranges; this is up from 81 percent in the first quarter and 38 percent a year ago.

Sixty-six percent of member agents reported that annual home price appreciation is now five percent or less; this is down from 8-10 percent a year ago. Home price appreciation of more than 10 percent is now 16 percent, on average.

The percentage of home sellers getting 95 percent or more of asking prices is currently 68 percent, compared to 90 percent a year ago. Three months ago it was 75 percent.

Multiple offers from home buyers are also down substantially; the current estimate is 32 percent. It was 39 percent in the first quarter and 70 percent a year ago.

First-time buyers still account for one of three home sales nationally. Repeat and move-up buyers are the most active in higher priced markets. Recent home price appreciation and rising mortgage interest rates has, on average, only a minimal negative effect on first-time buyers. Exceptions are marginal qualifiers.

Ben Garrett of West USA Realty, exclusive HouseHunt agent for Chandler, AZ, noted in his Real Trends report: “All of Chandler is growing because of increased job opportunities. The significant increase in hoe properties has died down. Investors have moved out, helping supply and demand. We continue to see growth in Greater Phoenix.” Median home price is $400,000.

Sharon Combs of Long & Foster, exclusive HouseHunt agent for Winchester, VA, reported more sellers than buyers, with 60-90 days average time on the market: “National builders are giving as much as $100,000 in extras and closing costs on existing inventory homes.”

Quentin Green, exclusive HouseHunt agent for Lincoln Park Homes in the Chicago metro area, said that average home prices are down 5-10 percent in the past year: “Our market has quieted down tremendously over the past 60 days. What sold last year in 15 to 30 days is taking 69 to 90 days to sell, at minimum. Higher end properties are taking 180 to 360 days.”

Lee Seaton of Prudential R.E. Professionals, exclusive HouseHunt agent for Eugene, OR, reported a 50/50 market for buyers and sellers: “There are many more listings for buyers to choose from and sales are taking a little longer, but prices are stable or gradually rising.” Move-up buyers are most active.

In our market in Mid-Fairfield County, much of the previous information is also true. We are seeing what I call 'Buyer's Revenge'. Some buyers who have been waiting for a change in the market conditions sense that that time has come, and they feel that they are in a position of strength. This is true in most cases. The exception to this rule is when an exceptional house comes on the market with an exceptional price. Then, multiple buyers may be vying for a single property, and the result will be a multiple offer situation, with the selling price coming in above the listing price.

For homes that are listed too high it is not unusual for buyers to make offers of 10% below the asking price. Many sellers have not yet understood the change in the market conditions which makes the sale of their home unlikely.


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