SURPRISE – WE HAVE A “NORMAL” REAL ESTATE MARKET

SURPRISE – WE HAVE A “NORMAL” REAL ESTATE MARKET

 

If you have been watching my market updates, you would know the real estate market shifted again. Nothing serious, we are not falling off a cliff like 2007-2010. We have transitioned into a “Normal” market. I don’t believe the market moved to a Buyer’s Market, but since so many people don’t know what “Normal” is, they think it is a Buyer’s Market.

We have not had a “Normal” since at least 2003, that’s like 11 years ago. Most Realtors were not even in the business at that time.

So, what does it mean to be in a “Normal” market?

Why did the market Shift again?

What does this mean for home values?

A “Normal” real estate market is one where there is more of a balance between supply and demand. It takes longer for homes to sell. Buyers have more choices. And Seller’s can no longer take advantage of buyers.

In a “Normal” market we will see some of the following:

• Buyers will pay more for value, such as upgrades, view, condition, location in a neighborhood
• Seller’s may have to pay Buyer’s Closing costs
• Seller’s will have to price less desirable homes to attract buyers
• There will be MANY Expired & Cancelled Listings in 2014

 

There are several reasons for the shift. First, values jumped again in 2013. In many areas, values are only 15-20% below the BOOM Bubble prices. Prices can’t just go straight up, affordability comes in play.

Next, as values jumped last spring and summer, the new listings started Over Pricing. I have 3 current buyers that were looking last August. They all did the same thing. The saw more homes come on the market at higher prices. They felt Over Priced homes. The backed off and watched the market. Then, Priced Reductions. Those reductions were not values dropping, but merely Over Priced homes moving their price towards the market value. But it wasn’t just my 3 buyers that saw this and acted in this manner. Many buyers pulled back and Demand dropped off. This happened right as we were headed into the Off season for real estate here in the valley.

As more price reductions came, some buyers got back in, but many have waited till this Spring. Inventory of Single Family Homes is now up 77% from June of 2013. That is HUGE!

We can’t forget to count how tight lending is for borrowers. I have a buyer who no longer qualifies for the mortgage he was approved on several months ago due to guideline changes. He went from approved at 10% down to requiring 20% down.

There are other reasons for the Shift. Investor demand dropped off dramatically. Second home buyers also declined. There are probably other reasons I am not savvy to, forgot or overlooked. I think this paints a picture.

Everyone is asking, what does this mean for home values? No one can tell the future. Property values will either go down or we will see more homes sell based on their true value. That is upgrades, views, condition and location within a neighborhood. This is going to be a Nightmare for Appraisers…

The feeling is that our new group of home sellers, being home owners versus Banks and Short Sellers, will not drop their prices quickly. Many will pull their home off the market and not move or simply rent it out.

So what should you do if you are a Seller in today’s market. First, hire a Great Realtor, I am available. Have them market your home, review comps with them and price as best as you can. Once you are on the market, it will tell you if you priced correctly. No showings or less than 2 per week, then buyers and realtors are rejecting your price. If you have moderate showings, then it may take a bit to find the right buyer, but pay attention to the feedback, the buyers may be rejecting your price. Of course if you get reasonable offers, then you did good in pricing your home.

If you are a home seller getting little or no showings, if you don’t want to lower your price, take your home off the market. It will not sell over priced. I know, I know, “why don’t they write an offer?” They just won’t. They don’t want to get emotional about a home, writing an offer, if they feel the seller is unreasonable with their price.

By taking your home off the market, you will lower inventory and help transition back towards a sellers market. If all over priced homes did this tomorrow, it would be a seller’s market again. It is all about supply and demand.

If you are a buyer. What is your situation? Is the right home out there for you? If so, buy it but negotiate a reasonable price. I know, you are afraid of over paying. As I said before, we will see homes sell based on what they have to offer. If a home is nicely fixed up and offers the value don’t fear paying for it. Hire a professional Realtor, like myself, and we will help you make an educated decision. Remember, the decision is always yours, as you will be the one living there.

 

Welcome to a “Normal” Real Estate Market. My name is Jeff Cameron, with The Cameron Team at HomeSmart Live in McDowell Mountain Ranch in north Scottsdale.