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Guest column by Beth Moran–
As a local Realtor people ask me about the market all the time, and the most prominent question recently asked, particularly by sellers, is if their window has closed?
According to my favorite economists who crunch those numbers, there’s nothing to indicate that anything will drastically change so expect the seller’s market to continue with some adjustment for seasonal slowing.
That being said it doesn’t mean that buyer’s expectations haven’t changed. Today’s buyer is looking for a turn-key property and if it needs repair or is dated, sellers need to price accordingly.
One aspect of my job is in creating a market analysis for both buyers and sellers. This data keeps me up to date and although it’s important that I stay educated, it’s the attitude of my clients who make the greatest impact on the market because they’re the ones bringing the money to the table.
Whenever I begin a market analysis, the days on market (DOM) of recent sold properties in a neighborhood is a major factor. Although only one aspect of the overall comparison, this data carries weight when pricing a home for sale. Essentially, every recent sale impacts the value of your home. I explain what appraisers are looking at to determine value and caution sellers to stay within that parameter.
In Citrus Heights this past August the longest days on market was 119 days. This particular property had a couple of failed escrows and finally closed, however compared to the average DOM of 12 days you can imagine the sigh of relief from the seller after that house finally closed escrow.
Also on The Sentinel: Eight-bedroom mansion in Citrus Heights seeks buyer for $1.5M
For the month of August 2021 in Citrus Heights, the average home sold for 3.4% above asking price. As my appraiser friend, Ryan Lundquist emphasizes, that’s the average, as some sold higher and some lower.
In our community, the property at 6441 Terra Way, Citrus Heights took the prize for the highest percentage closed at 24% over asking price this past August. It was listed at $270K and sold for $335K. This just happened to be a fixer and all cash so although not typical it still proves that if the property is priced correctly it will receive multiple offers and in this case received 33!
Another indication of a hot market is the number of homes that reduce their price before it gets an offer. As I said earlier if the home is priced correctly it will receive at least one offer within the average DOM or perhaps more than one. This past August just 12 homes accepted a reduced price offered, or about 10% of the 112 homes that did sell.
According to my favorite national economic guru Mike Simonsen, from Altos Research, 30-35% of homes take a price reduction before they get sold which indicates a normal market. From this perspective we’re still hot but things could take a dramatic turn if interest rates start to increase so I caution sellers to pay attention to the subtle cues from buyers.
Speaking of interest rates, as you may know there is an inverse relationship between interest rates and housing prices. One grows larger as the other decreases.
For example, I sold a home at the end of 2017 and moved into my rental expecting the market to slow and hoped to gain an advantage and buy low as the economists predicted. The market did start to slow by the end of 2018 when interest rates rose to over the 4% mark. But then rates began to fall which fueled the 2019 market.
Then in 2020 Covid hit and instead of the market stalling people realized that the work from home job option provided opportunity along with low rates, essentially a win-win. We saw record migration from the fire disaster areas increasing demand as well.
What we may see are more listings of homeowners who haven’t been making their mortgage payments now that assistance has ceased but don’t assume that these homes will be distress sales. Most people still have equity to cash out so they’ll be able to make this market work to their advantage.
The bottom line is that inventory is half of what it was a few years ago and it’s not going to correct for a couple of years until the builders deliver what should have been built 10 years ago. For those of you still deciding on your next step I’d be happy to provide a market analysis which may help you decide whether to jump into the market at this time or not.
Beth W. Moran is a local Broker (DRE01264309) selling real estate since 1999. She can be reached at (916)947-3993 or [email protected]
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