June was another good month for residential home sales in the towns in this Lakes Region report with 92 transactions at an average price of $251,218. Last June we had 77 sales at an average of $478,304. For the first half of the year we have had 412 sales at an average price of $291,352 compared to 325 sales in the first half of 2011 at an average sales price of $328,294. That’s a 26% increase in sales but an 11% drop in the average sales price. So we have got some good signs and some bad signs. Sales are up and prices are down, but we do have to get rid of this huge inventory before prices will trend back up.
Sellers are always asking their agents why they aren’t getting many, or sometimes “any,” showings, or why their home is not selling. These are kind of a simple yet very complicated questions, I’m afraid. But basically it comes down to several factors: 1. There are far fewer buyers. 2. The high inventory level of homes on the market. 3. The price being asked for the home.
The current high inventory level is a big part of the problem. We currently have over 1,300 listings available in the twelve towns in this report. Overall, we average about 70 homes that sell each month so that equates to an 18 to 19 month supply of homes on the market. That’s a lot of property to sell. If your home is in the dreaded $300,000 to $400,000 price range it gets worse. There were only 63 homes in that price range sold in the past year. That’s 5.25 homes sold per month which equates to a 29 month supply of homes (!!!!) in this price range. So buckle up, based on that fact alone, it could take two years to sell your home.
Think about when you were a kid and sides were being picked for the baseball game at recess. Eventually, even the worst player gets chosen for a team in the end. The better players always get picked first. In real estate it is usually the home that best fits a buyer’s needs that gets picked first as long as the VALUE is there. If the house is nice, but the VALUE isn’t there, the buyer moves on to the next best player–I mean the next best house. Unlike picking sides at recess where you only had a limited pool of players to choose from, in real estate more homes go on the market every week. For Joe Homebuyer there’s always a chance that there could be a better offering coming on the market soon. It’s a good thing school recess wasn’t like that–some kids would have never been able to play ball at all…
It is no secret that lower priced homes are selling better than the higher priced ones. Based on the inventory level of homes under $100,000 as of July 1 and the fact that there were 6.9 homes sold per month over the preceding 12 months we have a 12.8 month supply in this price range. That’s better than 29 months, right? In the $100,000 to $200,000 range there are 27.75 homes sold per month equaling a 13 month supply. The $200,000 to $300,000 range averaged around 13.4 sales per month which equals a 26 month supply and in the over $400,000 category there is a 28 month supply.
If you didn’t get picked for a team right away at recess, you might have decided to hone your batting skills a little or at least offer to buy the captain a candy bar after the game to see if that improved your odds of getting picked sooner. In real estate, if you aren’t getting showings or offers you really need to look at the value proposition that your home offers to the few buyers that are out looking. You can’t change the number of buyers that are looking or the inventory that is available, but you can control your asking price. After all, there is a price at which your home will definitely get some attention and sell. I guess it all depends on if you want to play ball now or maybe sit on the bench a little longer. We REALTORS® would like to take all the credit for sales, but it is the owner that really sets the stage for a successful transaction by agreeing to a price that will get the batter to take a swing….
Data complied as of 7/14/12 using the Northern New England Real Estate Network.