Market Watch July 2014

The halfway point of the year is a good time to see where we are this year compared to last year.  Before we look at this year compared to last I think it is important to remember how strong last year was.  Both unit sales and dollar volume increased over 21% last year.  This was by far the biggest year over year increase we have ever had.  It is not surprising that our results this year have been much more mundane.  Unit sales this year have declined by 6.3% while average prices have increased just over 2%.

     While I would never say I’m happy with a reduction in sales, the truth is I’m not really that disappointed.  Increases like we saw in 2013 are clearly unsustainable.  A moderate decline in unit sales this year demonstrates that the market has fully recovered from the housing recession.  I believe that by the end of this year we will be closer to 2013 levels than we are now.  There are two specific reasons I feel this way.  One is that the last two months of 2013 were very weak compared to the first ten months. The second is that the first two months of 2014 were significantly slower than the March through June period.  

     The two biggest factors affecting the housing market going forward are job growth and inventory levels.  Job growth has clearly been sluggish for the past few years but has begun to show some improvement in recent months.  Inventory levels are still significantly below historical levels.  The best way to increase inventory is to build more new homes.  I do believe that construction levels will continue to increase but not as fast as fast as the market demands.

     Over the second half of the year I do not expect to see the dramatic monthly swings we saw earlier this year.  I expect inventory levels to remain a challenge and I believe that if job growth improves, so will real estate sales.

     If you are in the market to buy a home you must be prepared to make an offer on a home as soon as it is listed and you had a chance to see the home. Homes that are updated and priced right sell within days. If you are in the market to sell your home you are in a good position. We have very low inventories. In either case, if you are buying or selling, call me on my cell phone 812-499-9234 or email at RolandoTrentini@FCTE.com

When you determine to sell your house, one of the first choices that comes up is tactical: do you try to sell it yourself as a “For Sale by Owner” property—or do you enlist a real estate agent? Since your object is to maximize your profit, you might think that most thrift-minded home owners would decide to eliminate the agent’s commission and do the work themselves. But that’s not the case.

The majority of sellers ultimately team up with a real estate agent. Sometimes they go the For Sale by Owner route first, but after testing that method, change courses. The statistics show that the selling price of Realtor^®-assisted home sales is higher (a $40,000 difference, according to the latest study) which certainly would explain part of the reason. But other factors come into play, too:

1.Pricing:   If you aren’t immersed in the area’s real estate business five to seven days a week, there’s no way you can have the intimate knowledge about the current market that comes with daily work in the field. A real estate agent comes armed with extensive knowledge of the local market and all the changes that have brought it about. It’s extremely important to price your home correctly to sell it on the first go-round. It’s a demonstrated fact that the longer a home sits on the market, the lower its final sale price. 

2.Time and Energy:   A For Sale by Owner sign in the front yard means you are in charge, 24/7! That’s despite any other demands on your time—for example, your job! One of the benefits of using a real estate pro is that selling your property is our singular focus: our job! It means marketing, networking, working with buyers. Doing whatever it takes to get your house sold is our first priority. Lacking the same kind of time and resources, a For Sale by Owner seller is at a clear disadvantage in the competition to sell houses. It’s a marketplace where one missed buyer can mean the difference between a listing that turns into a sale…and a listing that turns stale.

3.Objectivity:   The house is yours: you designed or decorated it; you’ve fixed and painted and mowed and swept it. If you took your work seriously, you feel at least some pride in how it’s presented. Unfortunately, that’s a problem. Lacking objectivity in the sales milieu can be one of the biggest hindrances to actually selling your house. It makes it hard for you to negotiate—to see and acknowledge the flaws a buyer sees. And it can make buyers wary of even wanting to negotiate with you in the first place. Either factor can prove costly. Separating owner from sales agent opens communication. It’s a relief for everyone!

4.Paperwork:   This is the most obvious point. If you choose to wade into the paperwork/deadline process yourself, you’d be wise to count on needing a bit of extra attention from a good real estate attorney—if only to avoid potential litigation down the line.

5.Security:   It’s unfortunate, but putting your house up For Sale by Owner in can make you a target. Less-than-honest folks are out there—creeps who may specialize in sellers who might not follow the proper measures for letting people into their homes.

If you are looking into selling your own home this summer, I’d like to offer you a complimentary property evaluation. Whether or not you decide to go the For Sale by Owner route, it’s sure to be well worth discussing what to expect from today’s market! You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com