Deciding when to sell your home can depend on a variety of factors. Perhaps your local market conditions are favorable to sellers, or you’ve recently changed jobs, or your family is growing and you need to upsize. Whatever the case may be, making the decision to sell your home is the first step in your selling journey.
Deciding to Sell Your Home
Once you know it’s time to sell your home, it’s natural to feel a wave of emotions. A home is an integral part of a homeowner’s life. They provide countless memories and, for many homeowners, are their greatest investment. But once you’ve decided to sell, it’s important to look at your home with an objective eye to appeal to a wide variety of buyers.
Which repairs should I make before selling my home?
To get your house in top selling shape, identify its outstanding repairs. As you fill out your list, separate the projects into categories which are DIY-eligible, and which require a professional. This will help you to budget for your overall repair expenses and build a reasonable timeline. Some of the most important repairs to make before listing your home include fixing appliances, making sure your sinks and faucets work properly, repairing any cracks or holes in the walls, fixing all leaks and water damage, and ensuring that all systems in the home are functioning properly. Making repairs before you list your home will bode well for home inspections, negotiations, and can even give your home an advantage over other listings. Your agent may suggest a pre-listing inspection to make your home more competitive in a seller’s market.
Which upgrades should I make before selling my home?
When you sell your home, you’re inevitably competing against other listings in your area. The aesthetics of a house play a significant role in its ability to catch buyer’s attention, which emphasizes the importance of improving your curb appeal as you prepare to hit the market. Landscaping projects, new exterior paint, and upgrading your front entry are just a few ways you can spruce up the outside of your home.
And what about the interior? Consider upgrading your appliances to energy-efficient models, which are known for their high ROI potential. This is a great time to repaint your home’s interior as well. Consider using a neutral color palette to make it as appealing as possible to a wide-array of buyers. It’s also a good idea to identify rooms in which the flooring should be replaced or repaired. If it makes most sense to completely re-do your home’s flooring, choose a material that is within budget and has good resale value.
Working with an agent
Listing agents are trained professionals who work with homeowners to sell their homes. Your listing agent will be there to answer any questions you may have throughout the selling process and will negotiate with buyers’ agents to get the best price for your home. But their value doesn’t stop there. A listing agent will list the home, coordinate showings and open houses, and market the home. When choosing an agent, find someone with whom you are compatible both emotionally and professionally, and who cares about the goals of you and your household.
What’s my home worth?
Homeowners can get a general idea of how much their home is worth by using online home value estimators, like Windermere’s free Home Worth Calculator. Though these tools can provide some context behind the value of your home, nothing compares to the in-depth analysis of an agent’s Comparative Market Analysis (CMA). Using a CMA, an agent can accurately price your home to get it sold quickly.
For more information on your local housing market and how to sell your home, give me a call.
The following analysis of select neighborhoods in the Park City real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.
REGIONAL ECONOMIC OVERVIEW
The summer months saw continued growth in Utah’s labor market, which had already recovered all of the jobs lost to COVID-19 earlier this spring. The latest data available (August 2021) showed non-agricultural employment 48,100 jobs higher than the pre-pandemic peak. With the healthy growth in jobs, the unemployment rate currently stands at 2.6%, a level that has not been seen since before the pandemic hit. As impressive as the current jobless rate is, it is also worth noting that unemployment continued to fall even as the labor force expanded to a point never seen in the state before. Utah’s economy is currently in great shape, and short of any unforeseeable events, I see no reason why anything would derail the impressive growth the area has experienced.
PARK CITY, UTAH HOME SALES
❱ In the third quarter of 2021, 73 homes sold, which is 47.9% lower than in the same quarter a year ago, and 3.9% lower than in the second quarter of this year.
❱ Year-over-year, sales rose in Summit Park and Trailside Area/Silver Springs but were lower in the balance of the neighborhoods contained in this report. Compared to the second quarter of 2021, sales were higher in six neighborhoods, static in one, and fell in the remaining eight.
❱ Lower home sales are primarily a function of the number of homes for sale. With 48% fewer homes on the market than a year ago and 3.9% fewer homes than in the second quarter of this year, it’s not surprising that sales slowed.
❱ Pending home sales were down 58.7% compared to last year and were 2.6% lower than in the second quarter of the year. This, combined with significant supply constraints, suggests that home sales in final quarter of the year may not be strong.
PARK CITY, UTAH HOME PRICES
❱ The average home price in the Park City neighborhoods contained in this report rose 29.7% year over year to $2.26 million but was 3.6% lower than in the previous quarter.
❱ The Wanship, Hoytsville, Coalville, & Rockport market is the only one where prices were below $1 million in third quarter. The most expensive home sales were again in the Canyons/The Colony market, where the average price was $11.83 million.
❱ Prices rose in all neighborhoods other than Park Meadows, though the drop in prices there was marginal.
❱ Compared to the second quarter of the year, prices rose in all but four neighborhoods: Old Town, Park Meadows, Midway, and Wanship, Hoytsville, Coalville and Rockport.
DAYS ON MARKET
❱ The average time it took to sell a home in the Park City area fell 41 days compared to the same period a year ago.
❱ While days on market fell overall year-over-year, when you compare the third quarter to the second quarter, the amount of time it took to sell a home rose four days everywhere except Canyons/The Colony and Old Town.
❱ In the third quarter, it took an average of 41 days to sell a home, with homes selling fastest in the Canyons/The Colony neighborhood, and slowest in Upper Deer Valley Resort and Empire Pass.
❱ In small, expensive markets, such as those in Park City, it’s not surprising to see the speed at which homes sell swing wildly from one quarter to the next. There is clearly still buyer demand, but given high average prices, it’s taking a little longer for homes to sell.
CONCLUSIONS
This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.
Utah’s economy stands on very solid ground, which, when placed alongside historically low mortgage rates, leads to increased home buying activity. While the number of days it takes to sell a home has risen modestly compared to second quarter, home sellers still have the upper hand. As such, I have moved the needle a little more in their favor.
ABOUT MATTHEW GARDNER
As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.
In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.
The following analysis of select counties of the Utah real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.
REGIONAL ECONOMIC OVERVIEW
The summer months saw continued growth in Utah’s labor market, which had already recovered all of the jobs lost to COVID-19 earlier this spring. The latest data available (August 2021) showed non-agricultural employment 48,100 jobs higher than the pre-pandemic peak. With the healthy growth in jobs, the unemployment rate currently stands at 2.6%, a level that has not been seen since before the pandemic hit. As impressive as the current jobless rate is, it is also worth noting that unemployment continued to fall even as the labor force expanded to a point never seen in the state before. Utah’s economy is currently in great shape, and short of any unforeseeable events, I see no reason why anything would derail the impressive growth the area has experienced.
UTAH HOME SALES
❱ In the third quarter of 2021, 10,356 homes were sold, representing an 18.3% drop from a year ago. This is not really a concern given that during third quarter last year the area was in the midst of a COVID-induced housing boom, which is skewing the numbers. What is more informative was that sales rose 6.9% from the previous quarter.
❱ Year-over-year, sales dropped across the board. However, compared to the prior quarter they rose in all counties other than Salt Lake and Morgan—though the drop in both counties was only seven sales.
❱ The increase in sales compared to the previous quarter was aided by a significant increase in the number of listings in the counties contained in this report, which jumped more than 36% from the second quarter of this year.
❱ Pending sales, an indicator of future closings, were up in all markets other than Salt Lake. The 2.8% increase from the second quarter suggests that sales in the final quarter of the year may continue to show improvement.
UTAH HOME PRICES
❱ With the economy performing extremely well, and mortgage rates holding close to their historic lows, it was not surprising to see sale prices continue to trend higher. Compared to a year ago, prices were up 23.8% to an average of $600,715. Prices also came in 3.8% higher than in the second quarter of this year.
❱ Although Summit County appears to be underperforming, it is worth noting that it is the most expensive county in this report, with an average price in the third quarter of $1.58 million. I am not particularly concerned at the decline since it is likely to be short-lived.
❱ All counties contained in the report except Summit saw prices increase by double-digits relative to a year ago. All counties but Summit also saw impressive gains compared to the previous quarter.
❱ In the second quarter Gardner Report, I suggested that the annual change in home prices was going to soften, which proved accurate. Although price growth remains well above the long-term average, I expect to see the pace of growth continue to slow as we close out the year.
DAYS ON MARKET
❱ The average number of days it took to sell a home in the counties covered by this report dropped 21 days compared to the third quarter of 2020.
❱ Homes again sold fastest in Davis County, which was one of only two counties with average sale time below two weeks. Relative to a year ago, the greatest drop in market time was in Summit County, where it took 41 fewer days to sell a home.
❱ During the quarter, it took an average of 22 days to sell a home in the region. Although this is lower than a year ago, it was up 3 days compared to the second quarter of this year.
❱ Rising inventory levels led to more choice in the market, which put slight upward pressure on market time. This is not a concern, and though it might please home buyers, we are still far from a balanced housing market.
CONCLUSIONS
This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.
Utah’s economy stands on very solid ground. A stable economy and historically low mortgage rates are very stimulative to home buyers. Even though we have seen inventory levels grow and market time rise modestly—both of which favor home buyers—the data in aggregate is still heavily in favor of home sellers. As such, I have moved the needle a little more in their favor.
ABOUT MATTHEW GARDNER
As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.
In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.
This video is the latest in our Monday with Matthew series with Windermere Chief Economist Matthew Gardner. Each month, he analyzes the most up-to-date U.S. housing data to keep you well-informed about what’s going on in the real estate market.
Hello there! I’m Windermere Real Estate’s Chief Economist, Matthew Gardner, and welcome to the latest episode of Mondays with Matthew.
A few weeks ago, one of my viewers on You Tube sent me a note asking when I was expecting mortgage rates to start to rise and, if I believed that they were going to go up, how fast will they rise, and what impacts will higher rates have on home prices.
Well, I would like to thank this particular viewer for the question, and it’s going to be the topic of today’s video.
How Mortgage Rates Are Set
But before we start looking at the future of mortgage rates, I was speaking to some of our interns here at the office a while ago and one of them asked me to explain how mortgage rates are set and – because this is somewhat pertinent to today’s topic – I thought that I’d take just a minute or two to explain to you how this all works.
Of course, there are a lot of factors that impact the rate that a home buyer themselves will get, and they include credit quality, loan-to-value ratios and the like, but the base rate is set not by looking at a home buyer, but at the economy itself and, specifically, the bond market – and even more specifically, the interest rate of 10-year US treasuries.
Now, if you’re asking yourself why 30-year mortgages are based off 10-year bonds and not 30-year? Well, that would be a good question, and this is the answer. You see we move, on average, every 10 years and that’s why!
Here is a chart showing the average yield – or interest rate – on 10-year treasury bills by month going back to 2010 in light blue, and the average 30-year mortgage rate in dark blue. I hope that you can see the tight relationship they have to each other.
Of course, there are times when bond yields can go down and mortgage rates rise, and vice-versa but, in general, they track each other pretty closely.
And if you’re wondering why the rates aren’t simply the same, well it’s because a treasury bond has no risk – as its backed by the US government – but there is some risk associated with a mortgage, so buyers of mortgage bonds expect a premium to be added because of this risk, and this has averaged just over 1.5% since the 30-year mortgage came into being back in the early ‘70’s.
Now, there are some people out there who think that the interest rate on 10-year treasuries doesn’t set mortgage rates, rather its better to track the interest paid on mortgage bonds and, although I do see why they might think this, the base mortgage rate is actually set by treasury yields and the interest on mortgage bonds is set using that base and adjusting it to manage the prevailing risk tolerance that investors are prepared to accept so I believe that watching movements in the interest paid on 10-year treasuries is the right way to go.
And that, in essence, is how the 30-year mortgage rate is set.
The History of Mortgage Rates
If you are a regular viewer of these videos you will now that I like to start off with some context to the subject I am addressing and this chart will show the average rate for conforming 30-year fixed rate mortgages going back to their genesis in the early 1970’s.
Back in ‘71 rates were in the mid-7% range, rising to just under 10% in ‘74, before pulling back but, as you can clearly see, they started to spiral upward in ’77, ending the decade at almost 13% and if you’re wondering what led to this massive jump, well this was because the country had entered a period of high inflation.
In the ‘70s the country was pushed into a recession basically due to an oil embargo that led to the price of oil quadrupling and that led to a period of so-called stagflation which is when inflation rises, and economic activity slows.
And in the early ‘80’s we entered a period of so-called hyperinflation, as another oil embargo was took hold and the Fed was forced to step in and raised short-term rates which led rates along the yield curve to rise and this – of course – included 10-year treasuries which hit 15.3% in the fall of 1981 and that, as we have discussed, caused mortgage rates to hit an all-time high in October of 1981 at close to 18.5%. Rates then started to pull back and
In the 90’s, rates started to trend lower but jumped again in ’94 as the Fed tightened monetary policy given the significant growth that the country was seeing, but they started to pull back in the second half of the decade, falling to the mid-6’s before notching higher in ’99.
In the 2000’s, rates dropped to 5.3% in 2003 as the housing market boomed but, as we all know, it wasn’t all unicorns & rainbows in this decade of what was then – historically low rates.
The housing crash led the Fed to jump in by cutting interest rates, but they also started a massive purchase of mortgage bonds at very low interest rates as they were happy to take a low return as long as it stabilized the housing market. As a result of their efforts, mortgage rates fell almost a full percentage point, averaging just a hair above 5 % in 2009.
Riding the wave of low bank borrowing costs, mortgage rates entered the new decade around 4.7% and continued to fall steadily, dropping to the mid-3’s by 2012. But in 2013 you can see that rates headed higher. Why? Well, a big part of this has to do with some panic in the bond market, but we will get to that shortly.
Anyway, rates went up in 2014 before dropping to 3.85% in 2015 as the market calmed down.
They rose again after the 2016 presidential election, reaching their peak at the end of 2018 and start of 2019, but still ending the decade below 4%.
As for the current decade, well, it’s all been about COVID-19.
To understand what’s happened over the past couple of years, we need to look at the weekly average rate and I am sure that you have noticed the first spike in the graph.
And it was totally due to the Coronavirus which created an unprecedented situation for all rates (not just mortgages, but US Treasuries and everything else).
You see, investors were panicking during the early stages of the pandemic, not just because the country – essentially – shut down for a brief period, but there were rumors about a thing called forbearance, and investors were panicking that they would not get paid for the mortgage bonds they held, and they did what we all do when we get worried about the economy and, specifically, our investments. They get out of their investment positions and into cash and that’s absolutely what they did, but I should add that I am not talking about them stashing dollars under the mattress. No, they moved into cash positions in financial markets, which are the most liquid, nimble place an investor in the US can be.
And with a lot of institutions and individuals getting out of bonds and not many buyers out there, what happened to rates? That’s right, they rose to attract buyers and rise they did. So much so, in fact, that on a single day in March of 2020, mortgage bonds prices changed 5 times! Quite unprecedented.
Anyway, the Fed reverted to their old playbook and went on a massive bond buying spree with the biggest ever purchase of mortgage-backed securities on Thursday March 19 but, quite remarkably, they announced the very next day that they were going to buy even more. How much more, you ask… Well, they decided to buy three times more than the record purchase they made just the day before!
And because of this, rates dropped dramatically and continued to pretty much head lower for the rest of the year and into early 2021.
But then the music stopped, as you can see in the second highlighted spike in the above graph.
You see, a special election was being held in Georgia and the bond market decided to take a conservative stance prior to the election and that led rates higher again. But the election wasn’t the only reason why rates rose.
You see, COVID 19 cases that were dropping, improved vaccine distribution appeared to be in place, there were several stronger than expected economic reports released, and progress on a fiscal stimulus package. All of these factors led rates higher because, as you know, when economic news is positive, that is actually bad for bond yields as people move back into equities and out of bonds which is obviously bad for mortgage rates as bonds need to offer a higher interest rate to attract the few buyers that were out there.
Mortgage Rate Forecast
So that’s where we are today, but what of the future?
Here is my forecast for 10-Year treasuries through the end of next year and you will see that I am looking for rates to rise gradually as we move into next year and this will lead mortgage rates to start notching higher as well.
And here is my forecast for mortgage rates. Although they should move higher, I am still not seeing rates break above 4% until 2023 at the earliest and – even as they start to increase – I really don’t see it as a major deterrent to home buyers.
But before you start to say that this is only one person’s forecast and it could be wrong, lets look at my forecast compared to some of my industry colleagues.
As you can see, we are all in a pretty tight range when it comes to forecasting the average rate this year and next.
The bottom line is that although rates will rise, they will remain very competitive when compared to historic averages and the upward trend in rates is unlikely to have any significant impact on prices. That said, many markets are already having an affordability crisis and rising rates will certainly act as an additional headwind to price growth; however, it would take a significantly greater increase in rates to negatively impact prices.
Well, I hope that you have found this month’s discussion to be interesting. As always if you have any questions or comments about this topic, please do reach out to me but, in the meantime, stay safe out there and I look forward the visiting with you all again, next month.
Windermere offices across the Western U.S. have remained committed to serving their communities in 2021, collectively raising nearly $1.5 million so far this year alone, pushing the foundation’s grand total raised since 1989 to nearly $45 million. After a successful Community Service Day in June and a first half of the year which saw over $1 million raised, Windermere offices have continued to give back this summer. Here are some recent highlights from across our network.
Windermere Utah
Windermere Utah has always been deeply rooted in its community, and 2021 has been no different. This year alone, they have hosted multiple fundraisers and supported several organizations to affect positive change in their community.
One of the greatest challenges the COVID-19 pandemic has put on schoolchildren is access to technology. After searching for a way to provide digital access to local schoolchildren, Windermere Utah came across the organization Spy Hop, based in Salt Lake City. Spy Hop is a digital media arts center that provides classes in film, music, audio, and design for students between the ages of nine and nineteen. They offer mentoring and host technology drives to provide computers for students in need through a program called the Technology Liberation Project. Windermere Utah donated $3,000 to support Spy Hop’s programs while sponsoring their technology drive in August.
The office also rallied together to support Lincoln Elementary School. As a Title I school, they cannot ask for supplies or funds, often leaving them underfunded compared to other schools in the area. Windermere Utah donated $1,000 for kids to purchase the supplies they need for the school year.
From Left to Right: Misty Medina, Laurann Turner, Lincoln Elementary Rep, Shawnee Cooper, Lincoln Elementary Rep, Michelle Adkins, Chelle Preslar, Kelly Silvestor, and Stephanie Vera
Windermere Evergreen – Evergreen, CO
Windermere Evergreen has close ties to the local Rotary Wildfire Ready program and given the prevalence of wildfires across the Western U.S. in recent years, the office was inspired to tap their Foundation resources to support local wildfire relief efforts. John Putt–managing broker at Windermere Evergreen—is a member of the Rotary Wildfire Ready leadership council. A former paramedic and firefighter, he is passionate about providing resources and education to mountain communities regarding wildfire preparedness. After trying to come up with ways to support the program, they settled on a classic method of bringing the community together—a good old tailgate party. The office donated $1,000 to support the Rotary Wildfire Ready program, and the first annual Windermere Foundation Tailgate Party saw members of the community come together from all corners of town.
The Evergreen, Colorado Rotary Wildfire Ready firetruck.
Windermere Spokane – Spokane, WA
After hosting a blood drive earlier this year, Windermere Spokane has continued to find ways they can provide for those in need in their community. In early September, they turned their attention toward Spokane’s youth. When they saw the Spokane branch of Volunteers of America announce that they were planning to move their Crosswalk Youth Shelter across town to a new facility, the office jumped at the opportunity to help. Windermere Spokane held a matching fundraiser that ultimately raised over $21,000 for the new shelter. But the office’s recent foundation efforts didn’t stop there.
In preparation for the new school year, the office held their Spokane Sock and Shoe Event to support local low-income and homeless grade school-aged kids with new pairs of shoes and socks. This year’s event provided new shoes and socks for 116 kids.
Left to Right: Windermere agents Blythe Thimsen and Brenda McKinley
Windermere agent Brenda McKinley
Kritsonis Lindor Team — Windermere Bellevue South – Bellevue, WA
Windermere agents John Kritsonis and Karl Lindor of Kritsonis Lindor have been strong supporters of the Issaquah Food & Clothing Bank in years past, but the continued challenges of the COVID-19 pandemic made it clear that the IFCB needed their support more than ever. After food insecurity for children in their county jumped 54% in 2020, John and Karl knew they had to go all-in for their community. They doubled down on their fundraising campaign with a $25,000 match, ultimately raising $55,958. On August 20, their team spent the day volunteering at the food bank, putting together produce bags, and passing out groceries to families. All in all, they were able to provide groceries to over 120 families and over 350 kids. Their donations will support IFCB’s summer lunch program, which feeds roughly 300 children weekly during the summer.
To learn more about the Windermere Foundation, visit windermerefoundation.com.
A fire breaking out in your home is a serious potential hazard. Fortunately, there are simple steps you can take to identify the early signs of a fire and to prepare for an emergency. The following list will help you and your household put together your fire safety plan.
How to Prepare for a Fire at Home
Fire safety
Having properly functioning smoke and CO2 detectors is crucial to your safety. Test your smoke and CO2 detectors frequently and swap out the batteries when necessary. It is recommended to have a smoke detector outside each sleeping area and on each level of your home.
Always keep a fire extinguisher near the kitchen to combat flame outbursts from the stove or oven. It is best to have at least one fire extinguisher per floor for easy access. Keep in mind that fire extinguishers are used to control and extinguish small, contained fires. If a fire has spread throughout an entire room, or is beginning to engulf your home, know that fire extinguishers are no match for the blaze, and you should escape immediately.
Evacuation plan
A home fire can be very disorienting. During an emergency, it is critical that all members of your household know how to properly evacuate the home. Identify two ways to escape from each room in case one route is unsafe. Choose a meeting spot somewhere outside for everyone to meet a safe distance away from the fire. This can be across the street, down the block, at a neighbor’s house, or wherever makes most sense for you and your family. The most important thing is that you all have an agreed-upon rendezvous. Select an emergency contact whom you can reach out to if something goes wrong in the evacuation process or if a family member is missing.
Best practices
When escaping your home, crawl as low as possible to stay beneath the smoke. Test closed doors before using them to escape. If they are hot, that’s a sign that there are flames on the other side of the door and you should use an alternative escape strategy. Be careful that you don’t burn your hand when testing closed doors. Make sure everyone in your household knows the procedure for calling 9-1-1 and properly alerting the fire department. If you have pets at home, include them in your evacuation plans. If you are forced to decide between evacuating safely and trying to rescue a pet, know that firefighters are trained experts at saving animals from house fires.
Much can be determined about the conditions of a local real estate market by its supply and demand. When the supply of available homes is greater than demand, it’s referred to as a buyer’s market. Reduced listing prices, longer days on market, and an increased number of re-listings are also signs of a buyer’s market. While the current market is far from favoring buyers, it’s still a good idea to understand how a shift in the conditions could impact your search for a new home when the time comes.
What is a Buyer’s Market?
A buyer’s market creates ideal conditions for those looking to purchase a home. With more homes on the market than buyers, sellers must compete to gain their attention. In a buyer’s market, inventory is high, which means buyers can take their time in finding the right home as there is simply more to choose from. It’s common for homes to be on the market for longer periods of time. Sellers will sometimes need to drop their price to gain a competitive advantage, a selling tactic that is not nearly as common in hotter markets. To get a gauge of your local market conditions, talk to your Windermere agent about the current home price, sales, and inventory figures in your area.
How to Approach a Buyer’s Market
It’s understood that a buyer’s market favors buyers, but how can they utilize this advantage as they explore available listings? For one, buyers can be picky about finding the right home. Unlike a seller’s market, buyers have the luxury of weighing comparative advantages between homes knowing that time is on their side.
The conditions of a buyer’s market favor the buyer when it comes to negotiations as well. With fewer people buying homes, sellers are willing to be more flexible during the negotiation process, which gives buyers leverage. This underlines the benefits of working with a buyer’s agent. Buyer’s agents deliver significant value to the clients they represent in their ability to find the right home, streamline the buying process, and handle the negotiations and offer phases of a home purchase.
If you are selling a home while looking to purchase, you likely have the opportunity to make your offer contingent on the sale of your existing home, whereas in a seller’s market, there is a low chance of getting a contingent offer accepted. Contingent offers can be tricky, but when done correctly, it means that you don’t have to buy if you can’t sell.
When an agent sees that a home has been on the market for quite some time, that will fuel their ability to negotiate a lower price. In these market conditions, the chances are low that buyers will enter a bidding war or that a home will suddenly sell overnight to a competing offer. However, once buyers have identified their top candidate home, they should work with their agent to form a strategy for making a successful offer.
Sellers will be doing the most they can to make their homes stand out amongst the high number of available listings. It’s common for them to make repairs, upgrades, and other improvements to their homes before placing them on the market to entice buyers. Accordingly, a buyer’s leverage in negotiations carries through to contingencies, where they can work with their agent to negotiate repairs—a proposition that sellers will be more open to, given the limited number of buyers.
The conditions of a buyer’s market put the buyer in a favorable position as they go about finding the right home. For more information on how to increase your buying power, give me a call.
This video is the latest in our Monday with Matthew series with Windermere Chief Economist Matthew Gardner. Each month, he analyzes the most up-to-date U.S. housing data to keep you well-informed about what’s going on in the real estate market.
Hello there! I’m Windermere Real Estate’s Chief Economist, Matthew Gardner, and welcome to the latest episode of Mondays with Matthew.
Today we are going to take a look at the latest Home Purchase Sentiment Index survey that was just put out by Fannie Mae. And for those of you who may not be familiar with this survey, it’s actually pretty important and one that I track closely as it’s the only national, monthly, survey of consumers that’s focused primarily on housing.
The survey shows the responses of 1,000 consumers across the country to roughly 100 survey questions on a wide range of housing-related topics. Now, don’t worry, we aren’t going to look at all 100 questions – just the ones that solicit consumers’ evaluations of housing market conditions and that also address topics related to their home purchase decisions.
So, as you can see here, the overall index was trending higher pretty consistently until the pandemic happened which had massive, but temporary, impacts. And looking the last 3-years, you can get a better idea as to the speed of the pandemic induced drop – pretty remarkable.
Now, you will also see that the index recovered quite quickly; however, it fell again last fall as the pandemic was not going away at the speed many had hoped for – it rose again this spring but has been pulling back for the past few months but, that said, the August index level essentially matched the level seen in July.
Now let’s look at the questions that are used to create of the index number and how consumers responded.
When asked whether it was a good time to buy a home, the percentage who agreed with that statement rose from 28 to 32%, while the share who thought that it is a bad time to buy dropped from 66 to 63%. And, as a result, the net share of those who say it is a good time to buy jumped 7 points month over month and its notable that this is the first time the net share number has improved in the past 4-months.
What I see here is that – although improving modestly, the general consensus is that it is not a good time to buy and that sentiment is being driven by two things: One – there are still not enough homes on the market, and two, rapidly rising prices are scaring some people.
And when asked if they thought it was a good time to sell their homes it was interesting to see that share drop from 75 to 73% while the percentage who said that it’s a bad time to sell dropped 1 point to 19% and as a result, the net share of those who said it was a good time to sell pulled back by 1% but it still indicates that more owners think that it is a good time to sell than don’t.
Looking now at the direction of home prices over the next 12-months, the percentage who think that home prices will rise fell from 46 to 40%, while the percentage who expected home prices to drop rose from 21 to 24%.
As a result, the net share of Americans who say home prices will go up dropped by 9 points – from 25%, down to 16%.
Although this may sound concerning, I should add that the share of respondents who thought that home prices will remain static over the next year rose from 27% to 31%.
On the financing side, the share who think mortgage rates will rise over the next 12 months dropped from 57 to 53%, while the percentage who believed rates would be lower rose from 5% to 6% and, as a result, the net share of Americans who believed that mortgage rates will go down over the next 12 months rose by 5%, and with 35% of respondents thinking that that rates will hold steady – it’s clear to me that a vast majority are not worried about mortgage rates rising.
The takeaways for me so far are that consumers tempered both their recent pessimism about homebuying conditions and their upward expectations of home price growth.
Most notably, a greater share of consumers believe that it’s a good time to buy a home – though that population remains firmly in the minority at only 32% – while the ongoing plurality of respondents who expect home prices to go up over the next 12 months dropped but was still well above the 24% of consumers who believe home prices will fall.
Now, there are two more questions that are worth looking at which aren’t directly related to home buyers and sellers but are still important as they look at employment and incomes.
The percentage of respondents who said that they are not concerned about losing their job in the next 12 months remains very high at 82%, but it did drop by 2 points month-over-month, while the percentage who said that they are concerned ticked up to 15% from 13%. As a result, the net share of Americans who say they are not concerned about losing their job fell by 4 percentage points month over month, but remains well above the level seen a year ago.
And finally, when households were asked about their own personal finances, the percentage of respondents who said that their household income is significantly higher now than it was 12 months ago pulled back one point to 26%, while the percentage who said that their household income is significantly lower dropped to 12%.
As a result, the net share of those who said that their household income is significantly higher than it was a year ago rose by 1 percent month over month and came in 5 points higher than a year ago. It’s also worthwhile noting that most said that their household income is about the same as it was a year ago with that share rising from 56 all the way up to 59%.
Looking at all the numbers in aggregate, the index level was relatively flat in August with three of the index’s six components rising month over month, while the other three fell, and that tells me that the continued strength of demand for housing and definitely favorable conditions for home sellers may well be offsetting broader concerns about the Delta variant of COVID-19 as well as rising inflation that have both negatively impacted other consumer confidence indices.
Most consumers continued to report that it’s a good time to sell a home – but a bad time to buy – and they most frequently cite high home prices and a lack of supply as their primary rationale.
However, the ‘good time to buy’ component, while still near a survey low, did tick up for the first time since March, perhaps owing in part to the very favorable mortgage rate environment as well as growing expectations that home price appreciation will begin to moderate over the next year. A sentiment that I personally agree with.
Well, I hope that you have found this month’s discussion to be interesting. As always if you have any questions or comments about this topic, please do reach out to me but, in the meantime, stay safe out there and I look forward the visiting with you all again, next month.
It can be difficult for sellers to distinguish between two methods of finding the value of their home: a Comparative Market Analysis (CMA) and a home appraisal. Though they share many similarities, there are key differences in how the two approaches ultimately arrive at a listing price for your home.
The Difference Between a Comparative Market Analysis and an Appraisal
Comparative Market Analysis (CMA)
A CMA is conducted by an agent using their knowledge of the local market in conjunction with information available to them on the multiple listing service (MLS), which contains data on sold homes and market trends. A CMA helps to price the home more accurately, keeping the property competitive in the current market. For those who are thinking of selling their home For Sale By Owner (FSBO), it’s worth noting that you will not be able to conduct a CMA on your own, since, among other things, access to the MLS is exclusive to real estate agents.
Your agent’s analysis accounts for the various factors that influence home prices to arrive at an accurate estimate of your home’s value. A CMA compares your home to others in your area that have either recently sold, are currently on the market, or had previously listed but have since expired, typically using data from the past three-to-six months. Comparable homes, or “comps,” are homes whose characteristics are similar to your own, such as the housing type, condition, and the square footage and property size. A thorough CMA will provide information on what homes in your area are selling for, how long they were on the market, and the difference between their listing and sold price, and will list a low, median, and high selling price for your home.
Appraisal
The main difference between an appraisal and a CMA is the personnel involved. Whereas a CMA is conducted by a real estate agent, an appraisal is carried out by a licensed appraiser on behalf of the bank. Once a buyer applies for a loan to purchase your home, the bank will order an appraisal of the property. Though appraisers use methods of comparison similar to an agent’s CMA, unlike a real estate agent, bank appraisers have no vested interest in the sale of the home. The goal of an appraiser’s visit is to determine your home’s fair market value to ensure that the bank isn’t lending more money to the buyer than needed.
The following analysis of select neighborhoods in the Park City real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.
REGIONAL ECONOMIC OVERVIEW
Utah’s impressive post-COVID job recovery continues unabated. In the first quarter Gardner Report, I reported that the state had not only recovered all the jobs that were lost due to the pandemic, but employment was continuing to rise. This trend has continued. With 96,400 jobs added over the past year and 14,500 over the past quarter, total employment is now 26,900 jobs higher than the pre-pandemic peak. The only other state in the country that has recovered all the jobs lost due to COVID is Idaho. With a full recovery in the job market, it’s no surprise the jobless rate dropped further to 2.7% in June—its lowest level since March 2020 and the second-lowest rate in the nation; only Nebraska is lower at 2.5%.
PARK CITY, UTAH HOME SALES
❱ In the second quarter of 2021, 76 homes were sold in Park City, more than doubling the total number of sales in the same quarter a year ago, but down 12.6% from the first quarter of this year.
❱ Sales rose in all but two markets and doubled in seven of them. However, I would note that the pandemic was gripping the nation last summer, which clearly impacted sales and skewed growth-rate data.
❱ Although the number of homes for sale rose 12.3% from the first quarter, inventory levels were 47% lower than a year ago, which is impacting sales. I would like to see more homes come to market in the second half of the year, but I am not sure that will be the case.
❱ Pending home sales were 22.6% higher than a year ago, but down 28.3% from the first quarter of 2021 due to persistent supply limitations.
PARK CITY, UTAH HOME PRICES
❱ The average home price in Park City rose 53.9% year over year to $2.347 million, but prices were 12.2% lower than in the previous quarter.
❱ Only one neighborhood—Kamas & Marion— saw average sale prices below $1 million. The most expensive home sales were again in the Canyons & The Colony, where the average price came in at $10.89 million.
❱ Prices rose in all neighborhoods other than Canyons & The Colony. Because there were no sales reported there a year ago, I cannot make a comparison. All other areas saw double-digit increases.
❱ Of note is that four neighborhoods saw average prices breach the $1 million mark in second quarter. These were Heber, Midway, Summit Park, and Wanship/Hoytsville/Coalville/Rockport.
DAYS ON MARKET
❱ The average time it took to sell a home in the Park City area dropped 46 days compared to the second quarter of 2020.
❱ The amount of time it took to sell a home dropped in ten neighborhoods relative to the second quarter of last year and was down in six areas compared to the previous quarter.
❱ In the second quarter, it took an average of only 13 days to sell a home. Homes sold fastest in the Wanship/Hoytsville/Coalville/Rockport, Pinebrook, and Jeremy Ranch neighborhoods, and slowest in the Canyons & The Colony neighborhoods.
❱ The significant drop in market time can again be attributed, at least in part, to the ongoing impact of the local listing service instituting a rule that new construction developments add sales “en-masse.”
CONCLUSIONS
This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.
Compared to most of the country, Utah’s economy is flourishing, and this is undoubtedly influencing expensive markets like Park City. Financing costs remain very competitive, which is driving demand as supply levels remain very low. I doubt there will be enough improvement to the number of homes for sale to meet buyer demand, which will continue to cause prices to rise at a very significant pace.
Given all these factors, sellers continue to control the market, and I am therefore moving the needle more in their favor.
ABOUT MATTHEW GARDNER
As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.
In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.
Facebook
X
Pinterest
Copy Link
