List to sell

Another indicator being used to test the health of the real estate market is the amount of time needed to sell a home for all listings. In July, the median time a home was listed for sale on the market was 69 days, a decrease of almost 30% when compared to July 2011.

According to the National Association of Realtors (NAR), this median shows a wide range. It shows that one-third of homes purchased in July were on the market for less than a month, while one in five was on the market for a minimum of six months.

In many markets across the country, as the supply of homes decreased, the time on the market for homes to sell also decreased. Although there is more of a balance between the supply and demand of homes, homes that are appropriately priced typically sell faster. Homes that are priced higher, however, are still languishing on the market. Buyers will wait until homes are appropriately priced or will move on.

 

At the end of July there was a 6.4-month supply of homes on the market at the current sales rate. This is down 31.2% from 2011 when there was a 9.3-month supply of homes. In the past, when existing-home sales are coupled with about a six-month supply of listed inventory, there has been a median selling time of slightly over six weeks.

According to NAR, in such balanced markets, home prices, typically, increase 1% or 2% above the overall inflation rate as measured by the Consumer Price Index.

In Greenwich, the real estate market’s reaction to economic downturns lags the country as does its recovery. This explains why home prices have not upwardly adjusted despite a decrease in inventory in certain price points.

Realtors are still reporting that homes appropriately priced are receiving multiple offers, but these offers are close to ask and not significantly more than ask. Preferred terms and conditions remain the key basis for acceptance by a seller in multiple-offer situations. Understandably, an offer without a mortgage contingency or any other contingency would be more acceptable to a seller.

According to the chief economist of NAR, Lawrence Yun, the national median existing home price is expected to increase in the range of 4.5 to 5% this year and is projected to increase 5% next year. This is based on the limited inventory, especially, in the lower price ranges.

The indicator of days-on-market takes into account short sales that can take three months or more to sell. In the past, distressed sales were excluded. According to NAR, if these sales were excluded, the median time on the market for “traditional” sellers would be between six and seven weeks.

In the recent economic downturn, time on the market for traditional sellers reached 10 weeks in 2009 with a 10-month annualized supply. The median price dropped almost 13% in 2009, which is the largest annual decrease in history.

 

Mary Ann Clark is a Realtor with Coldwell Banker at 177 West Putnam Avenue in Greenwich. Questions or comments may be e-mailed to [email protected] or reach her directly at 203-249-2244.

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