Closing the Gap?*
There is still a gap between buyers and sellers. Sales have been slow in 2006 and 2007 because sellers want to obtain the best price possible for their property. This is understandable. Right now, however, because buyers have the upper hand in the market, sellers are finding that they simply can’t get the same prices that their neighborhood may have sold for just last year, or in 2006.
The Average Sales Price Percent Change Month-Over-The-Year, Single-Family Detached NVAR data confirms this situation. As in any bargaining situation, the seller pitches the high-ball and the buyer pitches a low-ball and they come together somewhere in between. It is rare in the existing market that a deal is struck above the seller’s request.
During the frenzied time of the market in 2005 and early 2006, multiple offers on homes often resulted in offers escalating above the list price. This is a rarity in today’s market.
In 2005 the sales price when compared to asking price was 98 percent of the list price. When you look at 2006 data, you will see that the level fell even more. It fell sharply down to 93 percent of asking price. That’s a 7 percent gap between a seller’s expectations for then current market value of a home and a prospective buyer’s idea of that home’s value. Sale Price as % of List Price shows this through 2006. The gap has not lessened, and the buyer is winning. That's good news for investors.
The fact that there are more homes on the market means that buyers can search for their first-choice home without imminent fear that unless they make an offer that day, it may be snapped up. There is also more time for buyers to get a home inspection, an appraisal and to secure the best loan product. In November 2006, the average house was on the market for 85 days, which resembles the time it took to sell a home in November of 1998, which was 90 days. In 2007, the figures show that the 90 days on the market has been exceeded in numerous pockets of the Metropolitan Regional Real Estate market.
Buyers today are also finding that sellers are willing to offer concessions to help cover some closing costs or are willing to bargain more on the selling price. We have all heard about the flat screen TV and the exotic car, thrown in to clinch the deal [but the exotic car is no longer allowed by lenders].
Real estate sales in Northern Virginia declined by almost 22% in January and February 2008. This is reported out of the National Association of Realtors and the Northern Virginia Association of Realtors (official verified data). Prices in NOVA likewise have cooled substantially, and it appears we have not yet reached the bottom. There is an uptick in prices and activity expected this summer, but that all depends on how the remainder of the jobs market and goods in this area plays out. While this area was previously insulated because of the Federal Government and Military in the area, there has been substantisl influx of private industry, and as a result the NOVA area is no longer "recession proof." For now – it’s wait and see and take advantage of short sales where you can.
Source: Northern Virginia Association of Realtors, National Association of Realtors, George Mason University Center for Regional Analysis, Metropolitan Regional Information Systems
Summary courtesy of: Texas Irish Lady
Texas Irish Lady