Seasonally the 4th Quarter is the best time to be a buyer and this year is no exception. Typically buyer contract activity is at its strongest from March through May and weakest between November and January. Buyers who were out-bid by competing offers last Spring will have a different experience now. October saw 18% more new listings hit the market between $250K-$400K compared to last October while buyer contracts are about the same within the same price range. There was only a 1% increase in new listings in the lower price range between $200K-$250K but a 12% drop in buyer contracts which caused overall supply to rise another 11%. The market is still a seller’s market, but more seller competition for fewer buyers translates into more price reductions and seller concessions until the Spring “Buyer Season” is upon us once again.
The market may be softening between $200K-$400K (which accounts for over 56% of MLS sales), but that doesn’t mean sellers are getting a raw deal. Monthly average sale prices per square foot in this price range have appreciated 5% since October last year and nearly 19% in last 5 years. Under $200K, the appreciation rate is 9.5% in the past year and 44% in 5 years. $400K-$800K has appreciated 6% in the last year and 14% in 5 years and the annual average sale price per square foot* over $800K has appreciated 3% in the last year and 10.5% in 5 years. What’s happening underneath that contract price, however, is an increased cost to sell at “top dollar”. That cost can take the shape of longer days on market with multiple price reductions, repairs, needed upgrades to the home prior to list and closing cost assistance.
*Annual averages are used in the higher price ranges to mitigate the sharp price fluctuations that affect this market.
Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report ©2018 Cromford Associates LLC and Tamboer Consulting LLC