Bay Area Real Estate: Real Estate Market

Friday, April 19, 2013

How many days on the market is ideal, when selling your house?: Part 6 of 8 - How To Effectively Price Your Home For Sale

DOM - Days on Market Trends in Contra Costa County

First off, I'd like to apologize for not updating more recently. Simply put, my personal and professional life filled my days and nights. We're back to smooth sailing and ready to hit it again. Thanks for following. Again, if you find value in the information presented here, please forward, share, and make comments. It helps me keep the flood gates open!

Is 45 days to get into contract too short or too long? YES! Wait, no!...Maybe! How about 4 1/2 days? The answer to this question depends completely on the seller's willingness to price their property appropriately as well as the motivating factors behind the sale of the home.

If the trend of DOM is decreasing, it means that buyers are snatching up houses more quickly than in the recent past, further reducing inventory and increasing demand. How much weight should be put on this data when establishing the sales price of your home? That is the real question. Let's dig a little deeper.

Immediately below is the averages days on the market for single family homes in Contra Costa County for the past year. Note the trend. Also, keep in mind that these are averages. One stubborn seller can skew any of this data pretty dramatically.

Graph 1 ~ Average Days on Market for all of Contra Costa County

The past year in Brentwood specifically:

Graph 2 ~ Average Days on Market for Brentwood, CA

If you've had your finger on the pulse of real estate of late then you know that home prices have been going through the roof. Looking at the above graphs illustrates one reason why. Although Days On Market is more of an indicator than a cause, it is an important indicator when it comes to establishing demand; a function of price. . Again, remember mind that these are averages. In today's market it is not uncommon for homes to go on the market and come back off in as little as "Zero Days on Market."

Side note: I don't know why any listing agent would advise a seller to pull their home off the market after less than one full day is beyond me. There are reasons to do this, but few and far between. I advise, as many ethical agents do, that leaving your home on the market for at least two full weekends (reviewing offers the Tuesday following the 2nd weekend) give adequate exposure.

Wishing you well in your real estate endeavors. Thank you in advance for remembering me when the topic of real estate arises, and THANK YOU SO MUCH all the referrals.

Andy Blasquez - Real Estate Listing Agent in Brentwood, CA

Andy Bla squez ~ The last Realtor you'll ever need to look for.
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www.andyblasquez.com

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Tuesday, March 19, 2013

Home Prices as a Function of Inventory: Part 5 of 8 - How To Effectively Price Your Home For Sale

Home Prices as a Function of Inventory

Let's take a detailed look at the correlation between Median Home Prices and Inventory in Contra Costa County over the past 10 years.

Andy Blasquez - Real Estate in Brentwood, CA

Graph-1

Median Homes Prices in Contra Costa County over the last 10 years.

Graph 1 shows the Median Home Price within Contra Costa County over the past 10 years, with a peak of +/- $660k in the summer of 2007.

Graph-2 (below) illustrates "Months of Inventory". This is not the number of homes on the market, but a relative inventory level. This take into account not just the number of homes on the market, but the number of willing and able buyers at that given time. In plain English...if no additional homes came on the market, this is how long it would take for current inventory to dwindle to zero.

Graph-2 Months of Inventory in Contra Costa County over the last 10 years.

The key point of this post is to demonstrate the correlation between the above graphs. Note how at the very point in time when homes went to their highest median price ever (Graph 1)...the amount of time it took to sell those homes went up dramatically (Graph 2). Then....look what happened afterward. With prices at their highest, followed immediately by a surplus of inventory at that price, we suffered arguably the biggest crash in real estate prices in history.

The contrary is also valid. Today, the "Months of Inventory" is .5. That means we've gone from 18 months, to 15 days of inventory. As these two bits of data are always correlated, sellers now know that a) they can list a property at a price higher than in the immediate past, and b) as long as these trends stand true, if the home doesn't sell at this 'optimistic' price, all the seller needs to do is wait until it will.

So what? What does this mean to you? That answer is simple.

If you're selling, it's OK...be optimistic.
If you're buying, realize that:
a) prices are still VERY low, considering even recent history
b) mortgage rates are unreasonably low (perhaps an unsustainable rate)
c) this is a sellers market. You need to submit your very, very strongest offer to be considered. 15, 20, 40 offers on each home is not uncommon in today's market.

If you get nothing else from this post, get this: Housing Inventory is never a function of only one variable. While reviewing market data, remember what happened with pricing and what might happen with pricing is not the only variable to consider when agreeing on a realistic price to list your property...or to offer for purchase.

Until next time, and thank you in advance for remembering me when the topic of real estate arises, and THANK YOU SO MUCH all the referrals.

Andy Blasquez - Real Estate Agent in Brentwood, CA