Lack of Inventory

Wouldn't it be ironic if the real estate recovery ended up being hampered more by lack of listings, as opposed to too many listings?  When we think of down markets, we think of lots of unsold houses, because people aren't buying.  If you talk to real estate professionals around the country now, they will likely tell you that people aren't buying because they can't find anything they want to buy.


How can this be true?  Shouldn't there be plenty of homes, especially here in Connecticut, where the recovery has been much less robust, and, indeed, where prices are still declining?  Actually, it makes sense, if you think about supply and demand.  The supply here is not keeping up with demand, because owners don't want to list if they can't recover their costs, or get the profit they thought they would.  They know that prices are declining still, and that the average home is worth 20% below what it was worth in 2006.  That, in many cases, deters them from trying to sell.  What is on the market has, in many cases, been there for some time, and isn't being shown.  Sometimes those properties are overpriced, and sometimes they have location, condition, or other issues.  Buyers aren't going to "overpay", especially if they need a mortgage, so those homes just sit.


What we have seen here, however, is that buyers will pay at or above asking, if they see something good, because so many people are bidding on what is available.  Therefore, new listings often have multiple offers on them, because good properties are rare, so paying more is not overpaying, it's an increase in the market rate.  And there's the law of supply and demand, played out for you in real estate.

Urgent Message to Listors and Potential Listors

Last month, I blogged about what I had learned from reading the new book Zillow Talk.  One of my primary takeaways from the book, which used statistics derived from the millions of real estate listings on Zillow to draw conclusions about best practices, was that there is a best and worst time to list.  The worst time--sometime in mid-December--seems obvious.  The best time, however, was a surprise:  30 days after most listings come on the market in the spring.  Why?  Because when buyers get serious, which takes them a few weeks after the spring market begins to heat up, they look for the newest listings, which are not the ones already on, but the new ones just entering. Those, therefore, are homes that have come onto the market just as people have begun to narrow and intensify their searches. 


Why did I mark this post urgent?  Because that sweet spot for listing--at least to get the most money in the fastest time, statistically--is now!  The authors boiled it down to "between filling out your bracket sheets for March Madness, and when the green jacket is slipped on at Augusta".  For those of you who don't follow golf, the green jacket-winning golfer at Augusta is crowned this coming Sunday. 


Now, I realize that there are always exceptions to every rule.  People who decorate well, and keep their homes neat all year, can do very well in December, when very little is on the market, and those buyers that are out there are very motivated.  Any given home can do well at any particular time, especially if it is well-priced, and in a good location.  However, if you want to play the odds, now is your time.  So beat the green jacket, and list this week!

Current Absorption Rates

Explanation of absorption rate: The rate at which available homes are sold in a specific real estate market during a given time period.  If you look at the number for Wallingford you can say “If market conditions do not change and if no new listings come on the market it will take 4.7 months for the current inventory to sell at the current pace of the market.  A balanced market’s absorption rate is typically between 5 – 7 months.”