Am I Getting Market Value For My Home Today?

Strong emphasis on “today”! The Coronavirus Pandemic has impacted the real estate market in more ways than one here in North Carolina.

2020 showings in North Carolina were tracking steadily along the same path as 2019 showings. Then on 11 March, showings took a nose dive and today, 5 April, showings are down 74% since 11 March.

According to Durham’s Stay At Home Order (click here), real estate services are considered non-essential – aside from appraisal and title services. In-person showings and open houses are prohibited. Other surrounding counties may be allowing in-person showings but Durham appears to be more restrictive.

Nevertheless, real estate transactions are still taking place. Upon entering my office this morning and checking the activity that occurred over the last day, I see 36 new listings came on the market and 24 homes sold. In full disclosure, this is activity that had occurred in Durham County as well as these counties: Alamance, Orange, Person, Granville, Wake, and Chatham.

For sellers that are putting their house on the market today and receiving / accepting offers, are they getting market value? Market value is an opinion of a home’s value partly defined by its exposure to a competitive market for a reasonable time prior to sale.

Since the number of showings are down so significantly, how competitive is the buying market when, in some cases, buyers cannot take in-person tours of homes and instead, must rely on videos and agent walkthroughs. Undoubtedly, most buyers would not put an offer on a home unless they were able to see it in-person. Less showings and fewer offers makes for a much less competitive market. Therefore, it can be argued that less competition means lower prices.

Many sellers are waiting until the market returns to some form of normality. On the other hand, sellers that are entering the market today are the highly motivated sellers – those that may HAVE to sell their home. That pressure alone may force that seller to take the first offer or any offer for that matter, further reducing the likelihood of receiving market value as the home may not have been on the market for a reasonable time prior to the sale.

Bottom Line

If you are one of those sellers that HAVE to sell their home during this pandemic, one way to ensure you’ll receive market value for your home is to hire an agent that will conduct an in-depth comparative market analysis and explain the numbers to you.

Photo credit: amycgx on VisualHunt / CC BY-NC

Don’t Let Frightening Headlines Scare You

There’s a lot of anxiety right now regarding the coronavirus pandemic. The health situation must be addressed quickly, and many are concerned about the impact on the economy as well.

Amidst all this anxiety, anyone with a megaphone – from the mainstream media to a lone blogger – has realized that bad news sells. Unfortunately, we will continue to see a rash of horrifying headlines over the next few months. Let’s make sure we aren’t paralyzed by a headline before we get the full story.

When it comes to the health issue, you should look to the Centers for Disease Control and Prevention (CDC) or the World Health Organization (WHO) for the most reliable information.

Finding reliable resources with information on the economic impact of the virus is more difficult. For this reason, it’s important to shed some light on the situation. There are already alarmist headlines starting to appear. Here are two such examples surfacing this week.

1. Goldman Sachs Forecasts the Largest Drop in GDP in Almost 100 Years

It sounds like Armageddon. Though the headline is true, it doesn’t reflect the full essence of the Goldman Sachs forecast. The projection is actually that we’ll have a tough first half of the year, but the economy will bounce back nicely in the second half; GDP will be up 12% in the third quarter and up another 10% in the fourth.

This aligns with research from John Burns Consulting involving pandemics, the economy, and home values. They concluded:

“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices), and some very cutting-edge search engine analysis by our Information Management team showed the current slowdown is playing out similarly thus far.”

The economy will suffer for the next few months, but then it will recover. That’s certainly not Armageddon.

2. Fed President Predicts 30% Unemployment!

That statement was made by James Bullard, President of the Federal Reserve Bank of St. Louis. What Bullard actually said was it “could” reach 30%. But let’s look at what else he said in the same Bloomberg News interview:

“This is a planned, organized partial shutdown of the U.S. economy in the second quarter,” Bullard said. “The overall goal is to keep everyone, households and businesses, whole” with government support.

According to Bloomberg, he also went on to say:

“I would see the third quarter as a transitional quarter” with the fourth quarter and first quarter next year as “quite robust” as Americans make up for lost spending. “Those quarters might be boom quarters,” he said.

Again, Bullard agrees we will have a tough first half and rebound quickly.

Bottom Line

There’s a lot of misinformation out there. If you want the best advice on what’s happening in the current housing market, let’s talk today.

What Agents Have That Homeowners Don’t!

Agents have their fingers on the pulse of the market. Since we sleep, eat, and drink real estate, day in and day out, we have a feel for the market.

There’s no other way to explain it. The data can remain consistent from week to week and month to month, but agents with “boots on the ground” have a sense when the beat is slightly off.

Over the past 6 weeks, the Triangle Multiple Listing Service (TMLS) data has been consistent regarding the number of active listings, months of supply, and days on market on a week to week basis.

But something’s not right. The number of price reductions or as many agents will say, price improvements, has been escalating. And unfortunately, I don’t have the numbers for price reductions but that goes back to my point, good agents have their fingers on the pulse of the market and can sense when the beat is off.

It’s also helpful that I work in an office (a big shout out to West and Woodall Real Estate) with some top notch / top gun agents. They’re truly some of the best you’ll find in the Triangle. And when we all start sharing this feeling, it’s not a coincidence.

Along with the higher than usual number of price adjustments, the number of buyers has appeared to diminish too. So, is there data to back up our feelings? Of course there is. You really didn’t expect me to say “no” there, did you?

Let’s look at homes priced between $100,000 – $400,000. I chose this range because more than 73% of all showings are for homes in this price range.

Over the last 90 days, homes in this price range averaged almost 9 showings per listing. Now, if we just take the last 30 days, the number of showings per listing was only 5.66. That’s more than a 36% drop in the number of showings per listing! So our feeling that the buying pool is starting to dry up was correct.

Fewer showings means more days on the market before a home sells. Sellers put their homes on the market anticipating it to sell in X number of days because that’s what the data was telling them. Sellers need to be in their new home by such and such a date so what do they do? Reduce the price to make that date. And maybe several price improvements.

Also, as we enter the “slow time of the year”, sellers need to understand the odds may be stacked against them. Now please, I’m not by any means suggesting sellers do not put their house on the market at this time, that’s not what I’m saying. In fact, there are many reasons why a seller would put their home on the market now but I’ll leave that as a topic for a later post.

All I am saying is the odds of selling your home has slightly decreased over the last four weeks. A month ago, a seller had a 73% chance of selling their home whereas today, they have a 69% chance of selling.

So what does this all mean? It means you, as a seller, need to hire a knowledgeable, professional, full-time agent that has their fingers on the pulse of the market.

That agent could have advised you on the price reductions taking place in the market along with the decreased traffic and lower odds of selling your home so together you could agree to price your home ahead of the market. Your home would be priced correctly to increase foot traffic and therefore, increase the odds of selling your home so you could meet the deadline of being in your new one.

Photo on Visualhunt

Is The Durham Market Slowing – August 2019?

The latest onslaught of “price corrections” on existing inventory coupled with thoughts of “where have all the buyers gone” may lead us to believe the market is heading downwards.

Is the market truly heading downward? Well, according to NAR’s chief economist Lawrence Yun, “Mortgage rates are at historically low levels, so I see no sign of the optimism about home buying fading,” he said. “However, the fact that slightly fewer are expressing strong intensity compared to recent prior quarters is implying some would-be buyers have concerns about the direction of the economy.”

So maybe that’s it. Buyers are becoming more cautious since they have concerns over the economy. That would help explain why there seems to be many fewer buyers than just a month or two ago. Fewer buyers means fewer showings. Fewer showings means fewer offers on homes. Fewer offers causes sellers to become more impatient than in the past and perhaps, that’s what’s causing all of these price drops.

Buyers are still out there but not with the same intensity we’ve seen in the past. In fact, according to NAR’s 3rd quarter Housing Opportunities and Marketing Experience Survey (HOME), 63% of the 2,705 households surveyed, indicated it was a good time to buy a home with 34% of them strongly believing now is a good time to buy.

And perhaps these signals are just cyclical in nature and is what we can expect during this time of year. After all, we are still ahead of August ’18 on multiple fronts: closed sales, sales price, and inventory.

Current as of September 10, 2019. All data from Triangle Multiple Listing Service, Inc.. | Report © 2019 ShowingTime.

Copyright ©2019 “HOME Survey: Housing Opportunities and Market Experience. September 2019” National Association of Realtors. All rights reserved. Reprinted with permission.