Alright, I decided to do a little analysis today on how 2008 is shaping up when compared to 2007. This is something I like to do every spring or so. I have found that so goes the first three months of the year – so goes the year.
I decided to look at only settlements (not contracts written) that have occurred in the month of February going back to 2003.
First off, 2008 is not 2007. In 2007 whenever I was asked about how the market was, I would respond that it will take a little longer to sell your home, but that the market was still very strong and that the sales price was generally going up.
So far in 2008, the story is a little different. From what I can see right now* – only half as many homes sold in February 2008 as sold in February 2007. They were on the market longer (by an average of 16 days), and the overall settlement prices fell by 6%.
This is definitely the first decline we’ve seen in a while. It is almost like the market is catching up to all the bad news that we’ve seen in the media.
Here is my quick snapshot:
I would like to tell you that these conditions are isolated, so I did a quick check for the following areas: Annapolis, Arnold, Crownsville, Davidsonville, Severn, Severna Park, Crofton, Gambrills, Edgewater, Glen Burnie, Laurel, Odenton, Pasadena, Riva and Hanover. The rest of the areas or towns had too few transactions to matter.
What I found was the drops are across the board.
On top of that, right now there are 3364 homes listed for sale in Anne Arundel County (not counting for new construction and build-to-suit properties). Based on the pace of February and taking into account seasonal changes in the market – we probably have 6 to 7 months of inventory on the market. Of course a lot of people are not going to wait around that long for their house to be on the market. They’ll withdraw their listings, just let them expire, or they will drop their price!
In any case that is a lot of gloomy news if you were looking for a turn-around in the market this year.
We’re probably looking at September or later before the market starts rocking again. The first transferees for the Base Realignment (BRAC) will start to relocate by then.
So, how do we use this info?
Real Estate Pricing Still Matters
First off, as always when selling a house – pricing is important. There are a lot of things to remember when setting the price. As your house first comes on the market, it generates a lot of interest in the community. If it is perceived to be overpriced, people will associate the house with that – even if you reduce the price later.
Also, you have to remember the vast majority of people do their home search online. And a lot of online home searches use a pull-down menu – so if you’re priced just a little bit above that price selection, and you’re willing to take something below it, you need to make sure your home is found by the people looking for it.
Make sure you are following an aggressive pricing strategy that will allow you to sell your home fast while getting the best value for your home. This doesn’t mean to give the house away, or to leave any money on the table when it comes time to negotiate a fair price. But you do have to be mindful of it and put a lot of thought and consideration into how you want to price your home.
Real Estate Marketing Still Matters
Just listed postcards, door hanging, staging, curb appeal, directional signs, open houses and Internet advertising – all still matter. Yes, it is true that most buyers find their home either through the Multiple Listing Service (either by an online search or through their agent). But in today’s market you really can’t afford to leave any stone unturned.
In order to sell your house you need a real estate agent that knows how to cast the widest net possible.
I’m not one of those agents that think people can’t sell their home “For Sale By Owner” (FSBO). I think there are a lot of talented and knowledgeable people out there that know how to price and market a home – and save the real estate commissions in the process. But I think a lot of it depends on the market. Unless you’re willing to give deep deep discounts on your house, I don’t think 2008 is the year to be going FSBO.
A Good Time to be a Move-Up Buyer
As the chart above shows, if you’ve been in your house for any period of time (3+ years) you’ve brought built up some equity just in market changes alone. Meanwhile, the house you’ve probably been looking for over the last year or so is now at the lowest its been in a couple of years. FHA limits in Anne Arundel County have been increased, making it easier to qualify for certain loans – and conventional rates will probably follow. And interest rates remain at historic lows making the move-up even more affordable than it would have been in the past.
If you’re thinking of moving up, now is a good time to put your house on the market and begin searching for your new home.
And just to leave you with a bit of good news. To understand how important pricing and marketing are to selling your home – this year alone 124 houses this year have sold in 30 days or less. Price your home right, market it correctly, and you can still sell your home in a reasonable amount of time in 2008.