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July 2016 News
Existing Homes Sales Report
Sales of existing homes in May leapt forward to their strongest pace in nearly 10 years. According to the National Association of Realtors®, this spring's growth in demand amidst lagging supply levels nudged the median sales price to an all-time high. All major regions except for the Midwest saw strong sales increases last month.
Total existing-home sales (measuring transactions for single-family homes, townhomes, condominiums and co-ops) grew 1.8 percent to a seasonally adjusted annual rate of 5.53 million in May from a downwardly revised 5.43 million in April. Sales now sit at the highest annual velocity since February 2007 (5.79 million).
NAR's chief economist, Lawrence Yun, said that existing sales continued apace, rising in May for a third month in a row. He noted, "This spring's sustained period of ultra-low mortgage rates has certainly been a worthy incentive to buy a home, but the primary driver in the increase in sales is more homeowners realizing the equity they've accumulated in recent years and finally deciding to trade-up or downsize." Yun also noted that, "With first-time buyers still struggling to enter the market, repeat buyers using the proceeds from the sale of their previous home as their down payment are making up the bulk of home purchases right now."
The Price is Right...Or is It?
If you are planning to put your home on the market -- especially in an area with rising prices and stiff competition -- it can be tempting to list your property at a high price hoping that you'll actually get it. It sometimes works with cars, why not with homes?
Don’t do it. Selling homes and automobiles are very different things.
Experienced Realtors who've handled dozens, scores, or hundreds of transactions will advise you to price your home appropriately from the start in order to get your home sold quickly and at the best price.
Research backs up what experienced Realtors know: Overpricing a home and then lowering the price a few times afterwards usually leads to a final sales price significantly below what you originally should have asked for it. To make matters worse, the longer a home remains on the market, the deeper the discount is likely to be off the original price. Ouch!
How to price your home correctly
Homeowners sometimes seek to price their home based on factors like the price they paid, the balance owing, or on the profit they need to buy another house or reach their financial goals. These motivations are perfectly understandable but in reality the value of your home is what the market will bear. Here's the problem: If a property is overpriced, some potential buyers will never look at it -- and having no one show up to see it is a pretty clear message from the market. Others may view the home but fail to make an offer.
So, what can you do? Choose a Realtor who can provide a strong comparative market analysis (CMA) and who knows your local area intimately. Some agents may attempt to woo you with an inflated price -- it probably happens every day somewhere -- but in the end the market speaks clearly. Choosing an experienced Realtor who understands market-driven pricing will be a choice you won't regret.
Your Realtor's CMA should include sales prices for similar properties sold nearby recently, prices for currently listed homes (i.e., your competition), and prices of homes that were taken off the market because they didn’t sell.
If the price is right from the beginning, it usually means not only a faster sale, it typically means more money in your pocket.
Investing in Real Estate
Today's low interest rates and stabilized home prices have created some great investment opportunities! Investing in real estate has unique advantages over other types of investments:
Many investors are taking advantage of these great market conditions. Have questions? Give us a call. We are happy to help!