Here we are once again poised to begin real estate’s hottest season of the year and the supply of homes is still not keeping up with buyer demand. The fact that interest rates nudged up late last year resulted in some buyers putting the brakes on their plans – but only for a short time.
“Considering our horrible weather and the time of year, the market is pretty active,” said Kris Hoge, who is the broker/owner of RE/MAX Realty Associates in Munster with her husband Herm. “Right now I would say that houses in $250,000 and below range are moving more quickly than others, but there are definitely buyers out there looking in all price ranges. The majority of buyers we see today are so busy with their lifestyle that they are really looking for something that’s turnkey. That’s not to say that there aren’t still those buyers who are willing to make some changes in order to build their own equity, we’re just seeing more and more people looking for homes that are already updated – and there’s definitely a limited inventory of those better conditioned, remodeled homes in the first-time buyer price range. Higher priced homes have a better chance of being updated.”
“Whenever we get a listing that’s priced aggressively, not over priced but priced where it should be based on the condition - if it needs work, it has to be priced to reflect that – it’s going to sell because there’s definitely demand right now,” Herm Hoge added. “Based on what we’re seeing, there’s going to be a frenzy this spring. Our agents are already working with sellers who plan to list their homes sooner rather than later. If you’re thinking about selling this spring, it’s important to start working with an agent now and plan your strategy so you’re ready. The key with buyer’s today is pricing – you’ve got to really dig into the comparables and know what you’re up against. Unfortunately some of the pricing people see on the internet doesn’t reflect current market conditions. That’s the value of working with an experienced agent who knows the local market.”
In real estate, all homes have more than one price – the price owners would like to get, the price buyers would like to offer and an agreed upon price that seals the deal – and there a number of factors that ultimately determine how much a house will sell for at any given time.
When it comes to reaching the point of agreement that will result in a sale, owners are looking for best possible price while buyers want the best possible value. In order to negotiate price and terms, both parties need a deep understanding of current market conditions.
Outside of interest rates, local conditions have the biggest impact on price. The value of a house is related to local sale prices. The same two houses in different locations will always have different values. At the same time, supply and demand also play a role.
In a buyer’s market – where there’s excess supply compared with buyer demand – prices tend to decline. Then, when demand picks up, prices will rise as the supply of houses for sale declines. That’s precisely what started happening in late 2012, leading into the robust 2013 spring/summer real estate season that saw full-price offers and bidding wars for the most desirable properties. The pendulum swung back toward a seller’s market.
“Throughout the last few months I've had multiple buyers get me criteria for homes in South Lake county – Crown Point, St. John and a few other communities - and I’m having difficulty finding them houses that are in good shape that meet their needs,” Jason Moon of Realty Executives Premier in St. John said. “The inventory in my experience is low so we're doing a big push to show potential sellers that the market is better for them - prices have been going back up consistently for past few years – while there are still great incentives for buyers like low interest rates.”
As we head into March, the consensus is that we’re looking at conditions similar to last year in the local real estate market.
“The biggest sign to me is that I had six different deals last year that resulted in multiple offers on properties. This demonstrates that buyers were not finding much. When a good listing did hit the market, it didn’t last long. Many of those multiple offer situations resulted in buyers offering well over asking price,” Moon added. “I already have buyers stacked up looking for good quality home that just aren’t available right now. The other indicator is the uptick in all the new construction. You can drive around most new developments in the area and there is quite a bit of building activity. Builders know they have pent up demand, and they are working to fill that gap.”
While it still remains to be seen how supply and demand will be impacted during the spring/summer of 2014, one thing’s for sure - if you’re selling your home, knowing what buyers are looking for, from price to pristine condition - will help ensure a faster, more rewarding sale. There’s no doubt that buyers today are well versed in the importance of getting the maximum value for their home investment.