Home Sellers: How the Nation's Low Inventory Affects You
The national attention on low inventory tends to focus on buyers: how fewer homes on the market affect buyers, and how home buyer behavior changes in response. We’ve heard of the return of the multiple offer, a phenomenon almost as mythical in these difficult real estate times as the sighting of a unicorn. But it seems that across the country, low inventory is creating that kind of magic on the real estate market. Our focus here: how the magic affects sellers.
Year over year, sources such as HousingTrac, the Department of Numbers, and the National Association of Realtors (NAR) estimate the nation’s supply of homes for sale has declined 20.7% from this same period last year. Meanwhile though, thanks to sunnier employment statistics, continued lower home prices, enticingly low interest and increased consumer confidence, more buyers are on the market this spring, with still more expected for summer.
What Does This Mean to the Seller?
One reason sellers may be holding off on listing their homes is the hope for better prices in the future. But ironically, listing a home now, with such a dearth of market-value listings, could be key in getting more than expected for that home. Bidding wars are taking place all over the nation, and that could mean sellers get asking, or more than asking. For example, Zip Realtor® Guy Contaldi wrote in his recent blog that in Boston, “seller’s homes ( if priced correctly) are selling quicker and getting much closer to their asking price,” as low inventory in that city pushes towards a seller’s, rather than a buyer’s market.
Easier to Sell
Part of the bidding process is the buyer’s demands. In a buyer’s market, these can be anything from reasonable repairs to more expensive requests, like covering closing costs or buying down interest points. When houses are scarce, these demands tend to get easier to meet—if they don’t disappear completely.
Now, even properties with flaws that might have languished in a different market find buyers. In some cases, buyers are waving home inspections all together (we don’t recommend this, by the way; but it can be a boon to a seller who doesn’t want to lay out a lot of cash to get the house sold).
Sales are also moving more quickly, which fewer days on the market. Alina Aeby, Zip Realtor® in San Francisco, notes that “For homes that were priced below $700,000, the months of supply inventory fell by 65 percent to one month. For higher-priced homes between $700,000 and $1.2 million, the months of supply inventory fell by 56.1 percent to also one month. It comes as no surprise that a number of real estate web sites currently rank San Francisco high among the nation of cities where homes sell the fastest.”
Real estate agents all over the country are noticing signs of a gradual shift from buyer control to seller control. Southern California, Zip Realtor® Michael Hickerson notes buyers no longer have a death grip on his local market. Low inventory means he doesn’t have to write offers up to “40% lower than asking.” He writes:
“…..a lot of formerly smug buyers are suddenly faced with the very real possibility that the fantastic environment they have enjoyed for four years is coming to an abrupt end. If this cycle is like the rest, the pace of sales will suddenly pick up much faster than was thought possible and we’ll all be off to the races again. So take heed, buyers. Have your ducks in a row when your go out to look at property. Be ready to 'pull the trigger.'”
Low Inventory Can’t Last Forever
Keep in mind as well the impending threat of shadow inventory flooding the market: bank foreclosures so far withheld from the MLS can’t be held forever, and when they come, their impact on inventory, prices, buying and selling will reverberate across the country. The current low inventory and resulting batch of more pliable buyers means now might be a particularly smart time to list your home. Contact your local Zip Realtor® for more insight.
- Low Inventory: A Mixed Blessing, and Possibly a Temporary One
- 3 Advantages of Using an Agent to Sell Your Home
Anna Marie Erwert writes from both the renter and new buyer perspective, having (finally) achieved both statuses. She focuses on national real estate trends, specializing in the San Francisco Bay Area and Pacific Northwest. Follow Anna on Twitter: @AnnaMarieErwert