While March Madness is typically a basketball reference, the phrase holds meaning when looking at our local real estate market as well.
As we’ve started to settle into the spring housing market “madness” is quite possibly the best term to describe the current state of what we are seeing.
The combination of low inventory (the number of homes available for sale) and a strong economy have us firmly planted in a seller’s market in which the best homes are seeing fierce competition from interested homebuyers.
What are the BIG ideas for the 2018 market?
There is a lot going on in the market, but in an effort to keep things simple let’s take a look at just enough information to hold a conversation the next time your neighbor says they are thinking about selling their home…
- As of the end of January there were only 851 homes active on the market in Dane County, down 53% from the 1,835 homes available in January 2015. The inventory problem is real.
- Rates have shifted upward to around the 4.5%. Despite the rise there doesn’t appear to be any slowdown in the number of strong and motivated homebuyers. Keep in mind, 4.5% is still historically a very low rate.
- Low rates and a strong economy, combined with the influx of millennials into the market, are driving high numbers of sales.
- Despite low inventory, the 380 sales in Dane County during January set a new record for January home sales in Dane County.
- Median sales price in Dane County are up nearly 10.4% compared to the same time last year.
In other words, supply is low, demand is high and we have a long ways to go for either of those to see noticeable change. (see more stats here)
Advice For Buyers: It’s probably never been more important to have a highly qualified agent serving you as a buyer than it is today. With the speed of the market, along with the competitive nature of negotiations, you’ll want an agent on your side that is knowledgeable about the market, responsive to the speed of the market, creative in drafting offers, and that has positive relationships with agents from numerous brokerages. Make sure your agent can connect you with the right professionals as well…sometimes getting the house simply means your agent connected you with the right mortgage lender.
You may need to be patient and accept the fact that you may not get an accepted offer on the first home you fall in love with. Understand that in many cases “winning” negotiations will mean getting an accepted offer and moving into the home, not beating the seller up for a lower price, closing costs, or other terms. The best homes will sell at or above asking price in most segments of the market, so if you aren’t prepared to come strong you may want to sit this year out.
If you are looking to buy this year there will be great opportunities out there, but be prepared for what you’re walking into, it won’t be easy, it’s likely to be a little stressful or disheartening at times, and you’ll likely need to move fast. At some point prices will stabilize, but after a number of years with solid appreciation we still believe that despite the competition & rising prices this is still a very safe time to buy a home.
Advice For Sellers: Now, as much as ever, it’s important to do things the right way. It’s true that you can probably sell your house pretty quickly by just getting it on the market, but the little things a top agent can bring to the table could add thousands of dollars in your pocket by increasing demand and drawing competitive offers, even after factoring in broker fees.
Sellers that are really winning in this market are taking all the right steps to effectively prepare their home for the market and then pricing right where they should be, or even slightly lower, to encourage buyers to make strong offers on day one.
It can be tempting in a market like this to shoot for the moon, but buyers typically give the most value and attention to new listings so missing your first week or two because you were priced too high can easily result in more days on market and a lower sales price. In this market nobody wants to make on offer on the home that everyone else already passed over.