Give Your Curb Appeal a Boost Before You Sell [INFOGRAPHIC]
Some Highlights
- If you’re thinking about selling your house this season, focusing on a few quick and easy updates outside can help your home look its best.
- 78% of real estate agents polled say poor landscaping affects property values. As a seller, that means your yard could impact your bottom line.
- When getting your house ready to sell, let’s connect to discuss what you should do to make sure your house shows well and catches the eyes of more potential buyers.
The #1 Reason To Sell Your House Today
Almost every industry is currently struggling with supply chain disruptions. This also applies to the current U.S. housing market, where buyer demand far exceeds housing supply.
Purchaser demand is very strong right now. The National Association of Realtors (NAR) just released their latest Existing Home Sales Report which reveals that sales surged in January. Existing home sales rose to a seasonally adjusted annual rate of 6.5 million – an increase of 6.7% from the prior month, with sales up in all regions. However, there’s one big challenge.
Inventory Is at an All-Time Low
Because purchaser demand is so high, the market is running out of available homes for sale. The above-mentioned report states that the current months’ supply of inventory of homes for sale has fallen to 1.6 months. This prompts Lawrence Yun, Chief Economist at NAR, to say:
“The inventory of homes on the market remains woefully depleted, and in fact is currently at an all-time low.”
Earlier this month, realtor.com released their inventory data for January. It helps confirm this point. Here’s a graph comparing inventory levels for January over the last six years:
As the graph shows, new listings coming on the market have decreased over the last four years (shown in blue in the graph). The graph also reveals that carry-over inventory has plummeted in recent years. This is because listings are now sold so quickly, they don’t stay on the market long enough to carry over month-to-month (shown in green in the graph). In other words, homes are not staying on the market for months as they had prior to the pandemic. In the report mentioned above, NAR reveals that:
“Seventy-nine percent of homes sold in January 2022 were on the market for less than a month.”
Odeta Kushi, Deputy Chief Economist at First American, explains it like this:
“A higher velocity of sales (lower [Days on Market]) helps to explain a housing market characterized by both higher sales & lower inventory. Many resale transactions are happening so quickly that they ‘flow’ in & then out of the ‘stock’ between the fixed monthly measurement of inventory.”
What Does This Mean for Sellers?
Anyone thinking of putting their home on the market shouldn’t wait. A seller will always negotiate the best deal when demand is high and supply is limited. That’s exactly the situation in the real estate market today.
Later this year, inventory (and by extension, your competition) will increase as many homeowners are waiting to put their homes on the market in the spring and early summer.
In addition, Len Kiefer, Deputy Chief Economist at Freddie Mac, says:
“Housing starts start off 2022 strong, just edging out 2021 for most in January since 2006.”
As these newly built homes are completed, they will also become competition for your house. This gives you a tremendous opportunity right now. Don’t wait for that increase in competition in your area. If you want to sell in 2022 and are ready to start the process, today is the day to list your house.
Bottom Line
If you’re ready to sell, let’s connect to get your house on the market while today’s inventory situation is in your favor.
October 2021 Housing Market Update
The October 2021 Housing Market Update was held on October 19 at 12 p.m. If you missed the live webinar or would like to watch it again, it is available below.
Home Price Appreciation
Geoff Green, the host of the event, jumped right into the stats. First, there has been an amazing amount of appreciation taking place in the U.S. housing market. For example, the year-over-year average appreciation as of July 2021 was +19.2%. Of course, the pandemic has greatly impacted the market. In other words, many people decided to leave metropolitan areas and move to suburban and rural areas. Consequently, the lack of inventory, low mortgage rates, and a robust economy created a “feeding frenzy” of potential buyers.
The map below shows price appreciation by states and regions.
However, according to Ivy Zelman of Zelman & Associates,
“Closings are set to decline roughly 10% year over year in the 2nd half of 2021 and home price appreciation is on the cusp of flipping to a decelerating trend.”
Geoff stressed that decelerating means a slower amount of appreciation, and not a depreciation of value.
Mortgage rates and the impact on purchasing power
From January of 2020, rates plummeted down and bottomed out at beginning of 2021. They have been rising since. Mortgage rates have now jumped above 3%. Historically, these rates are still very low.
However, the chart below demonstrates how rising rates can impact your buying power.
More factors discussed
Geoff presented data on factors impacting the economy and the housing market. For instance, the rate of inflation, the high price of food, supply chain issues, oil prices, and more may impact the decision to buy or sell a home.
National Housing Market Stats
Existing home sales are starting to come down after last year’s numbers, but they are coming down softly. Average home sale price is appreciating at a lower rate. The months’ supply of inventory is actually starting to come up, but nowhere near the levels it has been or needs to be to meet demand.
Meet our Panel
Panelists for the October 2021 Housing Market Update are Tiffany Megna, Green Team New York Realty, Keren Gonen, Green Team New Jersey Realty, and Jessica Imparato, Cardinal Financial.
They discussed what they are seeing from their perspective, with “boots on the ground,” Despite stats showing the market softening, they have not seen a decline in their businesses. Jessica discussed how prospective buyers can be impacted by an increase in mortgage rates.
To see the entire presentation and panel discussion, click here To sign up for Housing Market Updates, click here.
“Housekeeping” Details
What Buyers and Sellers Need To Know About the Appraisal Gap
It’s economy 101 – when supply is low and demand is high, prices naturally rise. That’s what’s happening in today’s housing market. Home prices are appreciating at near-historic rates, and that’s creating some challenges when it comes to home appraisals.
In recent months, it’s become increasingly common for an appraisal to come in below the contract price on the house. Shawn Telford, Chief Appraiser for CoreLogic, explains it like this:
“Recently, we observed buyers paying prices above listing price and higher than the market data available to appraisers can support. This difference is known as ‘the appraisal gap . . . .’”
Why does an appraisal gap happen?
Basically, with the heightened buyer demand, purchasers are often willing to pay over asking to secure the home of their dreams. If you’ve ever toured a house you’ve fallen in love with, you understand. Once you start to picture yourself and your furniture in the rooms, you want to do everything you can to land the property, including putting in a high offer to try to beat out other would-be buyers.
When the appraiser comes in, they look at things a bit more objectively. Their job is to assess the inherent value of the home, so they’re going to study the facts. Dustin Harris, Appraiser Coach, drives this point home:
“It’s important for everyone to understand that the appraiser’s job in the end is to remain that unbiased third party, to truly tell the client what that home is worth in the current market, regardless of what decisions have been made on the price side of things.”
In simple terms, while homebuyers may be willing to pay more, appraisers are there to assess the market value of the home. Their goal is to make sure the lender isn’t loaning more money than the home is worth. It’s objective, rather than emotional.
In a highly competitive market like today’s, having a discrepancy between the two numbers isn’t unusual. Here’s a look at the increasing rate of appraisal gaps, according to data from CoreLogic (see graph below):
What does this mean for you?
Ultimately, knowledge is power. The best thing you can do is understand appraisal gaps may impact your transaction if you’re buying or selling. If you do encounter an appraisal below your contract price, know that in today’s sellers’ market, the most common approach is for the seller to ask the buyer to make up the difference in price. Buyers, be prepared to bring extra money to the table if you really want the home.
Above all else, lean on your real estate agent. Whether you’re a buyer or seller, your trusted advisor is your ally if you come up against an appraisal gap. We’ll help you understand your options and handle any additional negotiations that need to happen.
Bottom Line
In today’s real estate market, it’s important to stay informed on the latest trends. Let’s connect so you have an ally to help you navigate an appraisal gap to get the best possible outcome.
Maybe with the leverage you currently have, you can negotiate a deal that will allow you to make the move of your dreams.
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