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Supply & Demand Will Determine Future Home Values

Supply & Demand Will Determine Future Home Values

Will home values continue to appreciate throughout 2018? The answer is simple: YES! – as long as there are more purchasers in the market than there are available homes for them to buy. This is known as the theory of “supply and demand,” which is defined as:

“The amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price.”

When demand exceeds supply, prices go up. Every month this year, demand (buyer traffic) has increased as compared to last year and for the first five months of 2018, supply (the number of available listings) had decreased as compared to last year. However, a recent report by the National Association of Realtors (NAR) revealed the first year-over-year increase in supply in three years.

Here are the numbers for supply and demand as compared to last year since the beginning of 2018:

Supply & Demand Will Determine Future Home Values | MyKCM

The increase in the June numbers doesn’t mean that prices won’t continue to appreciate. In that same report, Lawrence Yun, NAR’s Chief Economist, explained:

“It’s important to note that despite the modest year-over-year rise in inventory, the current level is far from what’s needed to satisfy demand levels.

Furthermore, it remains to be seen if this modest increase will stick, given the fact that the robust economy is bringing more interested buyers into the market, and new home construction is failing to keep up.”

Bottom Line

The reason home prices are still rising is that there are many purchasers looking to buy but very few homeowners ready to sell. This imbalance is the reason prices will remain on the uptick.

If you’re interested in purchasing or selling a home you can start by Contacting Us directly or start searching for your new home here

Anthem, Desert Hills, New River, Phoenix, Mesa, Scottsdale, Tempe, Glendale or Surprise.

Real Estate Marketing Statistics August 2018

Real Estate Marketing Statistics August 2018

Supply between $200K-$250K has Risen 8.1% since May
Seller Price Reductions Up 7% in Popular Price Range

For Buyers:

If your budget lies somewhere between $200,000 and $400,000 for a home, there’s good news for you.  Supply between $200,000 and $250,000 has been rising gradually over the past 12 weeks.  After dropping 15% from 2,300 listings in January to 1,944 in May, it has since risen 8.1% to 2,101 listings in August, placing it only 6.7% below last year’s count instead of 18% below like it was 3-4 months ago. Listings between $250,000 and $400,000 have also risen sharply 5.3% from 4,791 to 5,044 over the past 4 weeks, placing them only 0.2% below last year’s count of 5,053 listings. The increase in competition has resulted in a notable 7.3% increase in weekly seller price reductions from an average of 778 per week in June to 835 in July.  56% of year-to-date sales in Greater Phoenix have been between $200K-$400K so this increase in supply should come as a little bit of relief for the majority of buyers.

For Sellers:

If you have a home listed between $200,000 and $400,000, then you make up 48% of everything that’s listed in the MLS.  Listings under contract in this price range have averaged 7.4% higher in volume than 2017 all year, until now.  Over the last two weeks, including the end of July through the first week in August, listings in escrow have dropped to 2.2% below last year’s level.  Buyer activity is expected to slow seasonally from the peak in April through the end of the year; however open contracts have dropped 26% since the 2018 April peak compared to a lower 20% drop in 2017 over the same time frame; all while corresponding supply has been rising.  Sellers haven’t seemed to notice this sharper decline as their average asking price per square foot has soared from just 3% higher than last year in March to as high as 7% higher in July.  The average sales price per square foot was up 5.9% in July, compared to 4.6% in June.  However, price is a lagging responder to shifts in supply and demand. We will have to wait and see if buyers accommodate sellers’ price expectations given that they have more to choose from in the marketplace right now.

If you’re interested in purchasing or selling a home you can start by Contacting Us directly or start searching for your new home here

Anthem, Desert Hills, New River, Phoenix, Mesa, Scottsdale, Tempe, Glendale or Surprise

What Do the Recent Drop Prices Mean to the Real Estate Market?

What Does the Recent Rash of Price Reductions Mean to the Real Estate Market?

Last week, in a new report from Zillow, it was revealed that there has been a rash of price reductions across the country. According to the report:

  • There are more price cuts now than a year ago in over two-thirds of the nation’s largest metros
  • About 14% of all listings had a price cut in June
  • Since the beginning of the year, the share of listings with a price cut increased 1.2%
  • This is the greatest January-to-June increase ever reported, and more than double the January-to-June increase last year

Senior Economist Aaron Terrazas further explained:

“A rising share of on-market listings are seeing price cuts, though these price cuts are concentrated at the most expensive price-points and primarily in markets that have seen outsized price gains in recent years.”

What this DOESN’T MEAN for the real estate market…

This doesn’t mean home values have depreciated or are about to depreciate.

A seller may put a home worth $300,000 on the market for $325,000 hoping a bidding war will occur and an overanxious buyer will pay more than its actual value. That has happened often over the last few years. If the seller gets no offers and reduces the price to $300,000, it doesn’t mean the home dropped in value. It is still worth $300,000. Make smarter, more strategic real estate decisions with guidance from a trusted property investment advisor. We used this Calgary based real estate lawyer to close our deal in our latest real estate transaction in Canada.

Home prices will continue to appreciate over the next 12 months (view here to see all the details). In this same report, Terrazas remarks:

“It’s far too soon to call this a buyer’s market, home values are still expected to appreciate at double their historic rate over the next 12 months, but the frenetic pace of the housing market over the past few years is starting to return toward a more normal trend.”

What this DOES MEAN for the real estate market…

This does mean that sellers should be more conservative when it comes to the price at which they list their homes – especially sellers in the upper end of each market.

Sellers have been listing their homes at inflated prices hoping a super-hot market will deliver a buyer willing to pay virtually any price to ensure they don’t lose the house. That strategy has worked somewhat successfully over the last two years. However, the time that strategy would have worked may have passed.

Again, quoting Aaron Terrazas in the report:

“The housing market has tilted sharply in favor of sellers over the past two years, but there are very early preliminary signs that the winds may be starting to shift ever-so-slightly.”

Bottom Line

Prices are not depreciating. However, if you want to sell your house quickly and with the least amount of hassles, pricing it correctly from the beginning makes the most sense. To ensure you get the best advice and guidance on setting the right price, Call Mays Realty for a realtor Bermuda Run. They can help you navigate the process smoothly and achieve your real estate goals.

If you’re interested in purchasing or selling a home you can start by Contacting Us directly or start searching for your new home here

Anthem, Desert Hills, New River, Phoenix, Mesa, Scottsdale, Tempe, Glendale or Surprise.