By now, you’ve probably heard that the market has changed.
Homes that used to easily sell are now sitting around waiting for a buyer.
So let’s talk about what’s happened, and how you can be successful moving forward to “win the race” against the other homes.
First, let’s talk supply and demand.
The measure of sales-to-new listings is the tool we use to gauge the new inventory coming in, and the rate of success exiting the market as sold.
At our peak, about 80% of the new listings sold in a month. That’s considered a VERY HOT sellers market, and it has never really gone much higher than that in the last 20 years.
When things shifted mostly in the month of April, the ratio dropped down 38%. That’s in what we define as a “balanced” range.
So far in mid-May, we’re at 36%.
But there’s really not ONE real estate market. One-bedroom condos can be doing something different than two-bedroom condos, or townhouses, or luxury estates.
Right now, there are some types of homes and price ranges that are seeing less than 20% sales-to-new listings, and some are holding at 50%+.
If the ratio is 20%, it means that out of every five listings that comes out in a month, only ONE is selling.
We define that as a buyers’ market, and the normal time to sell increases significantly.
I’ve said this for years… when markets change, they change fast.
But despite that, it still looks more like a correction than a crash right now.
Proof of that comes from the sales in Milton from April 29th to May 10th.
In that list, the homes that DID sell did pretty well. 103% of list price, and an average of 10 days on the market.
In fact, 45 out of the 70 properties in that list sold at or above asking.
However, during that same time period, there were 92 terminated/cancelled listings and 41 price changes by the other homes.
Want to know why?
This is what a sellers market looks like:
In this type of market, even the homes in poor condition or the homes that are priced too high are selling. There are VERY few homes that are considered “out of the market”.
But when things shift, as they have, it looks more like this…
Many more homes are “out of the market”, particularly the ones that are in poor condition or priced too high.
Buyers see more options, and they only go for the ones that are well-priced or in great condition (and/or great locations!).
This is what we’re explaining to all of our seller clients right now. You HAVE to look good, and you HAVE to be priced better than the competition. If you price the same as them, you’ve got a 1 in 3 chance of selling in the first 30 days.
Which is really where you have all your momentum. The longer a property stays on the market, the worse it gets.
If the value of properties goes down — and let’s be perfectly honest, this is a real possibility — then you also need to consider that selling NOW is better than selling LATER, at least in the short-term.
We call this “chasing the market”.
You can miss the value by just a tiny bit in the beginning, but if things drift down, you’re completely off where the market has gone. By lowering your price, you miss the value by just a bit on the high side, and you sit some more, and so on.
So think about pricing AHEAD of the market.
As Wayne Gretzky famously said, “I skate to where the puck is going to be, not where it has been.”
Do the same when you price your home. An honest assessment of the competition and the sales-to-new listings ratio for similar homes to yours is the KEY to making a good choice about pricing your home to sell, particularly in a market where less than 4 in 10 properties sells in a given month.