How Does the Supply of Homes for Sale Impact Buyer Demand?

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The price of any item is determined by the supply of that item, as well as the market’s demand for it. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index.

Their latest edition sheds some light on the relationship between seller traffic (supply) and buyer traffic (demand).

Buyer Demand

The map below was created after asking the question: “How would you rate buyer traffic in your area?”

 

How Does the Supply of Homes for Sale Impact Buyer Demand? | MyKCM

The darker the blue, the stronger the demand for homes is in that area. The survey showed that in 38 out of 50 states buyer demand was slightly lower than this time last year but remains strong. Only six states had a ‘stable’ demand level.

Seller Supply 

The index also asked: “How would you rate seller traffic in your area?”

As you can see from the map below, 23 states reported ‘weak’ seller traffic, 22 states and Washington D.C. reported ‘stable’ seller traffic, and 5 states reported ‘strong’ seller traffic. This means there are far fewer homes on the market than what is needed to satisfy the buyers who are out looking for homes.

How Does the Supply of Homes for Sale Impact Buyer Demand? | MyKCM

Bottom Line

Looking at the maps above, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet buyer demand, prices will continue to increase. If you are debating listing your home for sale, let’s get together so I can help you capitalize on the demand in the market now!

NEW ORLANDO LISTING

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4716 Rosewood Drive, Orlando, FL 32806

$549,000

Enjoy resort living at home! Exceptional estate encompasses spectacular vistas, gardens, trees and sweeping lawns. Minutes to town, schools and public boat ramp, the sun-filled, residence has been completely and masterfully renovated to the highest standards.  Characterized by beautifully proportioned rooms, high ceilings, magnificent architectural detail and extraordinary craftsmanship, this remarkable home offers amenities for a contemporary lifestyle while retaining the original ambiance and timeless elegance. Highlighted by one-inch wood floors, a foyer hall introduces nearly 3,000 sf of warmly welcoming interiors. Large windows flank the rear of the living room thereby ensuring a light-filled interior and sweeping views of the magnificent backyard pool. This home is the very definition of a place perfect for entertaining. An adjacent home office/den includes a floor to ceiling built in bookcases with trim and leads to the expansive backyard and rear patio with one of the prettiest pools I have witnessed. The stylish dining room is a showcase for the gourmet cook who has easy access to a charming kitchen and adjacent great room. The kitchen is open and inviting and cements the fact that this is a home for the kind of family or person who enjoys entertaining. The charming eat-in nook overlooks the front lawn and the kitchen features an amazing showcase pantry for your most exquisite china or pottery. The closets in this house will astound you with another pantry, two huge master closets and most rooms with walk in closets. The owners retreat offers HUGE closets and a sitting area along with a bathroom retreat featuring a soaking tub and a two-person shower. The fourth bedroom does not have an actual built in closet but has always been used as a working bedroom. This is truly a one-of-a-kind home and I promise you will not believe the amenities. While the home’s shell was built in the late 1950’s the entire house was gutted and reconfigured by former owners who were architects. The seller loves this home but a corporate transfer requires their move to Colorado so this is a great opportunity for the next buyer. Close walk to the public boat ramp for this neighborhood to the beautiful Conway chain of lakes. Finally, the new Pershing K-8 school will be completed in 2019 thus adding additional value to this home located on a private road. What an amazing value!

5 Reasons Why You Should Not For Sale By Owner!

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In today’s market, with home prices rising and a lack of inventory, some homeowners may consider trying to sell their homes on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons why this might not be a good idea for the vast majority of sellers.

Here are the top five reasons:

1. Exposure to Prospective Buyers

Recent studies have shown that 94% of buyers search online for a home. That is in comparison to only 16% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you?

2. Results Come from the Internet

Where did buyers find the homes they actually purchased?

  • 51% on the internet
  • 34% from a Real Estate Agent
  • 8% from a yard sign
  • 1% from newspapers

The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial.

3. There Are Too Many People to Negotiate With

Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale by Owner:

  • The buyer who wants the best deal possible
  • The buyer’s agent who solely represents the best interest of the buyer
  • The buyer’s attorney (in some parts of the country)
  • The home inspection companies, which work for the buyer and will almost always find some problems with the house
  • The appraiser if there is a question of value

4. FSBOing Has Become More And More Difficult

The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.

The 8% share represents the lowest recorded figure since NAR began collecting data in 1981.

5. You Net More Money When Using an Agent

Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.

Studies have shown that the typical house sold by the homeowner sells for $185,000, while the typical house sold by an agent sells for $245,000. This doesn’t mean that an agent can get $60,000 more for your home, as studies have shown that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.

Bottom Line

Before you decide to take on the challenges of selling your house on your own, let’s get together and discuss the options available in your market today.

Appraisers & Homeowners Don’t See Eye-To-Eye on Values

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In today’s housing market, where supply is very low and demand is very high, home values are increasing rapidly. Many experts are projecting that home values could appreciate by another 5%+ over the next twelve months. One major challenge in such a market is the bank appraisal.

If prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that closed recently) to defend the selling price when performing the appraisal for the bank.

Every month, Quicken Loans measures the disparity between what a homeowner believes their house is worth as compared to an appraiser’s evaluation in their Home Price Perception Index (HPPI). Here is a chart showing that difference for each of the last 12 months.

Appraisers & Homeowners Don't See Eye-To-Eye on Values | MyKCM

Bottom Line

Every house on the market has to be sold twice; once to a prospective buyer and then to the bank (through the bank’s appraisal). With escalating prices, the second sale might be even more difficult than the first. If you are planning on entering the housing market this year, let’s get together to discuss this, and any other obstacle that may arise.