As we wrap up 2013 we have a very different market to the one that greeted us in January. Earlier in the year and as late as August it was not uncommon for properties to hit the market and be greeted with multiple offers, some above list price. Several things have happened since the end of Summer that have affected the market.
- Inventory has grown from approximately 20,000 to 27,000 properties valley wide. With the large price increases experienced in the last 18 months, many people are in a position to try and sell their home for the first time since the bubble burst.
- It is this authors humble opinion that the Government shutdown in the fall led to a short term lack of confidence in the market. This caused some buyers to temporarily place home buying plans on hold.
- The Federal Reserve starting hinting that their $85 billion a month support of mortgage backed securities might begin to be scaled back as the economy showed signs of a serious recovery. This in turn caused a jump of about 1% to the avergage interest rate of a 30 year mortgage. The Fed then reassured the markets that scaling back would not be imminent and the rates dropped back a little but still ended much higher than earlier in the year. The jump was roughly speaking from 3.5% to 4.5%.
The result of these changes has been less buyers and more properties becoming eligible for sale. In short, the market is moving steadily from a sellers to a buyers market.
The chart below shows average days on market for the whole valley and neatly reflects the changes throughout the year. If you are wondering why the days on market value dips between October and November this is due to the sudden influx of new listings entering the market and skewing the number with their low average days.
As we enter into 2014 we expect to see price increases level off, more choice for buyers and the return of a slightly less volatile marketplace.
If you have any questions or need advice on all things real estate, please dont hesitate to drop us an email or give us a call!
Chris & Michelle Spalding