Everyone seems to be excited about this week’s Case-Shiller home price numbers reported for February. Even the title of the April 25th press release sounded a little giddy: “The S&P Corelogic Case-Shiller National Home Price NSA Index Sets Fourth Consecutive All-Time High” (spice-indices.com). Yes, the Case-Shiller 10-city and 20-city composite indices are close to the 2007 level. But before you become intoxicated with the thought of becoming rich by selling your home, here’s more to the story.
First, consider specific housing markets. Seattle, Portland, and Dallas topped the charts with annual index gains of 12.2 percent, 9.7 percent, and 8.8 percent respectively. Not surprisingly, Seattle and Portland have been the hottest real estate markets over the past year.
Tampa’s and Cleveland’s housing markets are at the opposite end of the spectrum with decreases of -0.5 percent, -0.3 percent during February; while Miami’s home price index was unchanged.
Washington DC reported an annual gain of 4.1 percent, with a 0.2% gain reported in February. David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices stated “There are still relatively few existing homes listed for sale and the small 3.8 month supply is supporting the recent price increases. Housing affordability has declined since 2012 as the pressure of higher prices has been a larger factor than stable to lower mortgage rates.”
It's true, housing inventory is lacking. At a time when homes should be coming to market for the spring season, the Greater Capital Area Association of Realtors Montgomery County single family statistics for March 2017 indicated that there were -1.8 percent less new listings compared to the same time last year.
And the total number of active homes for sale are -16.4 percent less than the same time last year. Although June is usually the peak time for home sales in our area, home sales increased 17.9 percent month over month, and is 11.7 percent higher than the same time last year (gcaar.com). Shades of 2005! Housing stats sound eerily like those before the housing bubble crash. But this market is different in many respects.
Consider that housing speculation is not as prevalent as it was at that time; homes are not being flipped in a matter of days in most areas. And home buyers are more sophisticated and savvy than they were in 2005; home buyers are more demanding, as well as sensitive to home condition and price.
Yes, it’s true that house values are increasing. Yes, home sales are breaking records.
But not all homes sell. You should realize that that home sale stats includes data of homes that sell.
Homes that don’t sell are not included in the numbers of closings, nor are they included in home sale prices. Homes that don’t sell tend to be overpriced for the home’s condition, or neighborhood. Sometimes, the physical location of the house is not ideal; for example, situated next to train tracks. If you’re selling your home this year, don’t get greedy. Get a professional opinion on pricing your home correctly; over priced homes tend to not sell quickly, or not at all. If you want to sell your home quickly and capitalize on home sale trends – consider repairing deferred maintenance issues, and making updates. Most home buyers are looking for a turnkey home, where they can move right in and without making immediate repairs and updates.
Dan Krell is a Realtor® with RE/MAX All Pro in Rockville, MD. You can access more information at www.DanKrell.com.