I received this question via email and thought I would share some of the
response I wrote.
As I've mentioned before, real estate is very local, right down to the subdivision. So instead of looking at all homes in the city of Keller, I concentrated on Hidden Lakes, the community in which this person's home was located. In the last six months there were six homes sold in that price range and nine active listings. That is a nine month supply. Considering that a six month supply is considered normal, nine months is definitely indicative of a "Buyers Market".
As far as time to sell, those nine actives have been on the market for an
average of 121 days and the six solds averaged 108 days. That time range does
include some of our slowest selling period. November and December are very
quiet when it comes to real estate activity.
The determinants of time on market are price, preparation, and presentation with
price relative to value being dominant. We can help you determine a value
range for your home. Where it is priced in that range directly and forcefully
impacts how long it is on the market. It has to be priced right, right from the
start. Why?
Every new listing has an initial burst of buyers looking at it. These buyers
have been looking for a while, and check out every new listing that meets their
needs. As a result, they are extremely well educated about their micro-market
of interest. As soon as they walk into a home they can tell if it is overpriced
or if it is a good deal. And appealing to these crucial first-lookers is what
will sell your home quickly. Once they are gone, they don't come back, and all
you get is the slow trickle of new entrants to the market. This is why listing
high and then reducing is a mistake - you miss those first lookers. Did I
mention they don't come back?
The result of this is that if you graph time on market, you see a strong "bar
bell" effect. Maybe thirty percent of the homes sell in a month, dropping off
to a trickle of a few percent a month, until you finally chop off the chart and
see the other end of the barbell with a big jump at "120+ days."
And, there are signs that prices are softening. We're eagerly awaiting February
numbers for some solid sign, as mentioned in an earlier post. If we are in a
down market, you must get ahead of the curve - buyers are demanding deals, and
every month you are in the market can cost you a lot more than carrying costs.
While secondary to pricing, preparation and presentation reveals to the buyer
the true value of your home, removing obstacles and objections and reasons not
to fall in love with a home. This is a very emotional business. A pre-listing inspection
and professional staging are the starting points there. They can help push
your price up in your value range.
The pre-listing inspection helps you catch any big problems and many of the
small problems. Having a clean inspection report to show buyers is a huge plus.
They won't see many of them at other listings, and seeing that you went to the
extra expense and effort is impressive and reassuring.
Presenting your home in a way that appeals best to buyers is also important, and
a professional stager is often needed. Your home strongly reflects your
preferences and your tastes. That's a big part of why you own a home! However,
once you decide to sell, your home turns into a house, and you must make it into
"product" with broad appeal. And unfortunately this means bare, bland, and
beige. This can be a painful step, and you just have to look forward to the fun
of decorating your new home!
So, the average time to sell might be 108 days. But the minimum time was nine
days, and I bet that that home was well priced, well prepared, and well
presented.
Wow, what a great question. And a complicated one, too!
There are two aspects of this question that I would like to discuss. The first is the use of dollars per square foot ($/sf), and the second is today's market.
Asking about the average $/sf of Southlake is a little like asking what is the average temperature in Texas. When compared to North Dakota, you'll figure out which place tends to be warmer, but doesn't help much with the weather in Southlake. All weather is local.
And so it is with real estate, but even more so. The average temperature of Southlake is useful (not much difference would be expected over a few miles), but the average $/sf is not. When compared to Saginaw or Haltom City, you'll figure out that homes in Southlake are more expensive, but it doesn't tell you much about homes in Estes Park or homes in Stone Lakes. The average $/sf in each subdivision varies a lot, based on age, builders, and lot sizes, etc.
So if the purpose of the question is to get some understanding of the value of your home, or of a home you are thinking of buying, I suggest you contact me with an address, and I'll be glad to pull some numbers for you. No obligations, no pressure.
The second aspect is describing today's market. We are on a stormy sea and not sure when we'll reach harbor. The Texas economy has finally started to feel the effects of the recession. (Thank heaven we are not in California, Arizona or Florida!) We can hope that the government's efforts with the stimulus package, bank rescue, and mortgage bailout are effective, but who knows. A huge factor helping housing right now is low interest rates (for those with good credit.)
Buyers, reading all of the bad news, are hungry for bargains. Sellers are nervous, and avoiding selling if they can. And the most current numbers are from the thinnest time of the year - January closings are pretty much December's contracts, and not many folks are house hunting in December. So the numbers are small enough to be suspect.
For instance, in Southlake there were 16 closings in January, down a lot from the 30 closings in January 2008. The 2009 closings averaged $168/sf and 84 days on the market. The 2008 closings averaged $149/sf and 87 days on the market. But the 2008 numbers include two very expensive homes that both sold for over $250/ft, skewing things. And 16 and 30 are very small numbers.
Let me summarize my thoughts on the market. Based on our web activity, buyer interest is as strong as ever. People love to come to this site and look at houses! A lot of folks spend a lot of time here! (Get back to work you slackers!) Buyer activity is a little slower than last year, but better than I feared before the New Year. Days on market is increasing, inventory is building up, and some reluctant sellers are being forced onto the market - there is some inkling that prices are feeling this downward pressure. The February numbers will be much more important than the January numbers in telling us where things are moving.
And again, if you want more info about a particular home or neighborhood, just drop me a line and we'll pull a few numbers for you!
