Real Estate Market Update
As with last month’s numbers, the real estate market remains relatively flat in Contra Costa County. New listings, pending sales, closed sales, days on market until sale, and total inventory are all nearly identical to last month, as well as the numbers from this time last year.
Interestingly, though, that’s not the “vibe” you get out in the marketplace. Many listing agents I met with over the past month had a slightly panicked look in their eyes when I asked about their firsthand market experience, typically responding, “Oh, it’s definitely slowing down. I’m hardly getting any showings on my listings, and my open houses have been pretty quiet.”
So, why the discrepancy? Why do the numbers say the market is humming along fine, when the feeling is that of a slowdown? There are two important factors at play: perspective and pricing.
In our local real estate market, spring is undoubtedly the hottest period of the season. It’s when we see the highest volume of buyer showings and offers on a per unit basis. Open houses can frequently be packed wall to wall with prospective buyers, and the number of offers can easily get into the double digits. Why? Because spring is not only the time of great buyer interest, it’s also the time when we have a lower inventory of homes available for sale.
Fast-forward to the summer months, and our inventory climbs markedly. From December to July this year, inventory increased 116%, and for that same period in 2013, inventory increased 171%. So perspective in regards to the market timing is important. Even though summer purchase volume actually increases, it feels so much lower than the crazy spring months because the pre-purchase viewing traffic is spread over many more homes.
In hot spring markets like we’ve had over the past couple of years, we see sales prices increase rapidly in response to a seasonal supply and demand imbalance. Like clockwork though, when the summer inventory catches up, the price increases slow down noticeably, frequently pulling back every so slightly. So this time of year, it’s easy for sellers to get caught up in the momentum and overprice their homes.
Coupled with the increased competition from other sellers, this minor pricing error can have a significant impact on showing volume. It’s quite possible that other factors are at play, but one of the first items to examine is how the home is priced relative to others in the neighborhood. Tune in next month for tips on how to determine if price is the culprit when a home doesn’t sell.
Nathan Hitchcock is a Broker Associate with Alain Pinel Realtors and can be reached by phone at 925.397.4000, via email at firstname.lastname@example.org or online at www.hitchteam.com. CA BRE Lic # 01414254.