Real Estate Market Conditions

As a sixteen-year real estate professional, I’m often asked; “How’s the market?” Although somewhat of a vague question, I do understand what they’re getting at. Your perception of the condition of the market is based primarily on your role in the market. I’ll get more into that in a minute.

Yes, there are hard facts that are just that, facts. Total number of sales, total number of properties on the market, average days on the market and average sales price are the primary ones. But what do all these statistics mean to you? It depends on what you want to do.

I’ll use my local market, Colorado Springs for the examples, however, these principles apply to whichever market you’re in. Over period of about twelve years, with a couple of temporary slow-downs, our market has seen consistent and steady price appreciation, typically 8-12% annually. At the same time we’ve been building 4,000-5,000 new homes per year and selling an additional 4,000-5,000 re-sales for a total of 8,000-10,000 total home sales.

The past year and a half, things have changed. Our total sales number has dropped off approximately 20% and the total number of homes on the market has increased by about 20%. Sounds terrible doesn’t it? But, at the same time home prices have continued to increase at a 3-5% rate. Now that doesn’t seem to be a sky is falling figure now does it?

We’re still selling approximately 7-8000 homes a year for a community of about 500,000. Not bad. Actually, it’s pretty good. The problem comes down to perception. A great deal of the players in the real estate market came in during that 12-year boom period. They thought THAT market was normal. No. it’s what we’re seeing now that’s normal.

So what does this mean? As a buyer, you’re going to get a reasonable price on you home. You’re also going to have more choices of homes because of the excess inventory. However, a great deal of excess inventory is OVERPRICED. So, as a buyer, you’ll most likely pass on a number of homes or not even look at them because their starting point is too far off from yours.

And, as a seller, this is the prime problem and the main reason why so many homes stay on the market for so long; they’re simply overpriced for the current market conditions. If you price a property right, it will sell and sell quickly. It will usually sell within a couple of months, not the 8 months to a year that some are seeing. So, if you want to sell, price it right and make any necessary adjustments quickly.

There’s another component that has affected perception that I haven’t talked about yet and will in another post. That’s fix-n-flip. Everyone’s seeing it on TV or has been to the seminars and now they think they can do it. It’s had a really bad effect on the market. As I said, I’ll get more into that on a future post. To learn more about real estate please visit my web site: http://roseusa.com

Tony Rose