Home sales continued to be sluggish in February, and decreasing affordability is holding back would-be buyers, according to Redfin’s latest Real-Time Price Tracker and Demand Pulse reports issued today. Slow sales have been largely attributed to low inventory for months, but many markets have now seen inventory rise while sales continue to fall. Several markets along the West Coast have seen sharp increases in inventory, yet home sales in the West fell 13.4 percent year over year, hitting their lowest point in five years in the first two months of 2014, while prices rose 19.1 percent year over year. Across 19 markets nationwide, prices rose 13 percent over last year, while home sales dropped by 10.3 percent.
What does this mean for you? Buyers and sellers will need to adjust expectations. Here is some expert advice from Redfin agents to help you successfully navigate the market.
Start searching early. “Many first-time home buyers couldn’t compete in the bidding wars of 2013,” says Redfin agent Marcus Fleming, Phoenix. “My advice to first-timers and experienced buyers alike is to start searching early to get an idea of what you can realistically afford and to be patient with the inventory as more homeowners start listing their homes.”
In hot markets, stay calm. “As proof that all real estate is local, the Atlanta market feels frantic right now, with inventory still extremely low and Redfin clients’ demand for tours and offers both up 47% from last year,” says Redfin agent Danielle Coats, Atlanta. “I’m advising my clients to take a step back before making an aggressive offer on any home that hits the market as it’s easy to get caught up in bidding wars. Inventory will eventually beget even more inventory, as many people who have one to sell are waiting for something to buy first.”
Sell your current home first to make your offer more competitive. “I’m recommending that buyers currently in a home sell first and then buy, even if it means living in temporary housing for a few months,” says Redfin agent Sandy Rosen, Boston. “Neighborhoods with great schools are incredibly competitive and I’m finding that it often takes waiving the mortgage contingency to win a bidding war here. Having the cash from your home sale makes waiving this contingency a lot less risky for buyers who are able to do it.”
Price it right. “This time last year, sellers could name their price and still get 20 to 30 offers,” says Redfin agent Eric Tan, Los Angeles. “This year, even homes that are priced competitively are only seeing two to three offers come in, often at or below list price. Pricing appropriately is crucial.”
Make it move-in ready. “It’s critical that sellers take the extra steps to make their homes more appealing to buyers right now,” says Redfin agent Sondra Savino, Chicago. “Do the repairs, make the bed perfect before listing photos are taken and get creative by writing a personal letter to buyers who tour the home describing improvements you’ve made and explaining what you love most about the home.”
Keep mortgage rates in mind. “This is the calm before the storm,” says Redfin agent Lynn Ikle, Baltimore. “Several of my home-selling clients have been waiting to have listing photos taken until the snow melts and their grass is greener. I’m encouraging them not to wait until the garden is in full bloom because right now buyers are anxious about getting under contract before mortgage rates rise too much more. Once rates hit the 5% mark, I expect demand to fall off significantly.”