For the first time in eight years, the overall US housing market is experiencing an odd balance between demand from home buyers and supply from home sellers, according to the latest quarterly “Current Market Conditions” survey. .
Only 45% of respondents reported more buyers than sellers, compared to a ratio of 61%-39% six months ago. Thirty-one percent reported more sellers than buyers; the remaining 24% said their markets are split almost evenly. In the South, the Midwest, the Northeast, and in California, the buyer-seller ratio is very close to the national numbers.
Results from the National Survey of Realtors in 47 states reflect the most recent monthly sales activity reported by the National Association of Realtors (NAR), which estimated the national supply of unsold homes for sale at 5.3 months for both January as for February. An inventory of 5.5 to 6.0 months is considered a balanced market between buyers and sellers.
“The last time we experienced a balanced housing market was in January 1998, when we had a 6.4-month supply of unsold homes,” said Walt Molony, NAR spokesman. “The lowest inventory record was in January 2005, when we reported a 3.7-month supply.”
There are exceptions to the latest reports of balanced housing markets, notably in many western states and Alaska, where buyers still outnumber sellers by a substantial margin, but the overall results indicate an orderly transition to more normal housing markets. . This seems to be the beginning of the ‘soft landing’ that many economists are predicting for homes for sale and certainly good news for both consumers and real estate agents after five years of market imbalance.
The National survey in the first quarter of 2006 also found:
o It is taking longer to sell a home in most markets, and the trend is up. Fifty-five percent of those surveyed said it now takes more than 60 days, on average, from listing to sale. Three months ago, only 30% said it took more than 60 days.
o Seventy-five percent of sellers are still getting at least 95% of their sales prices. Only seven percent say they are still getting more than 100%.
o Home appreciation in the last 12 months remains firm at around 10%. However, the trend is moving towards single digit appreciation. 54% reported five percent or less, 20% said between five and 10%, and 26% said 10% or more.
o Eighty-one percent reported a good supply of unsold homes in virtually all price ranges, with steadily growing inventories.
o Multiple offers fell from 70% a year ago to 39% in the first quarter of 2006 as demand for unsold homes declined in many markets.
o New and repeat buyers outnumber first-time buyers by a two-to-one margin in most of the country. The margin is three to one in California and the South. The national two-to-one ratio has held steady over the past three to five years despite rapid increases in home appreciation.
Thomas M. Stevens, president of NAR, noted, “Housing is just returning to a normal market. We’re still seeing double-digit annual price gains, but we should hit single-digit appreciation fairly soon.” Nationwide, existing home sales rose in February after a five-month decline. The national median home price for all home types was $209,000 in February, up 10.6% from $189,000 a year ago.
Responses of current market conditions closely reflect local economic news and population growth.
For example, Neil Kalinski of Diamond GMAC, an exclusive agent in Tempe, AZ, said that up-and-coming buyers are driving his market. Median home price is $260,000, 25-30% more than last year. He reports more buyers than sellers in this growing suburban Phoenix community and Arizona State University campus. Time to market is 30 days or less, and sellers typically get 100% or more of asking prices. “Overall, our market has slowed down a bit. Prices are starting to stabilize, which should be good for both buyers and sellers.”
Helena Talbot of Talbot and Company, sole agent for Leesburg, Sterling, Ashburn and Dulles, VA, reported more sellers than buyers and a median price of $400,000. The average time in the market from quote to contract is 90 to 120 days. Most sellers get at least 95% of the asking prices. “Our most activity is coming from upgrade buyers,” Talbot said. “The average price appreciation has increased between 10% and 15% in the last year.”
Saralou Durham of RE/MAX Preferred Group, exclusive agent for Montgomery, Anderson Township, Hyde Park and Mt. Adams in the Cincinnati, Ohio metropolitan area, reported a 50-50 buyer-seller market. Average time to market is 60-90 days. Sellers get at least 95% of asking prices, she said. Median home prices range from $181,750 to $397,500. “Exciting changes continue at Mt. Adams, meeting the needs of young professionals and empty nesters alike.” She emphasized the proximity to downtown businesses and shops and the quality of the schools.” Durham added, “Demand for new homes is so strong that vacant lots are bought up and old homes are torn down to rebuild new ones.”
Finally, Lonnie Maples of Realty Executives, an exclusive Riverside, CA real estate agent, reported more buyers than sellers and a good supply of inventory. The median home price is $435,000 in this rapidly growing metropolitan area. The appreciation is estimated at 15-20% in the last year. The average time on the market is 60 to 90 days. The biggest activity is from first-time buyers, he said. Sellers get at least 95% of asking prices.
Current First Quarter Market Conditions: Region-by-Region Results
US South Midwest NE Western California*
More buyers 45% 41% 44% 42% 50% 42%
More sellers 31% 37% 33% 29% 26% 31%
50-50 24% 22% 23% 29% 24% 27%
time on the market
0-60 days 45% 40% 34% 51% 49% 57%
60 more days 55% 60% 66% 49% 51% 43%
Sale vs Ask Px
90-95% 25% 29% 36% 25% 22% 22%
95% -100% More 75% 77% 64% 75% 78% 78%
annual appraisal
0-5% 54% 50% 74% 54% 45% 47%
5-10% 20% 23% 20% 13% 21% 18%
10%-15% More 26% 27% 06% 33% 28% 30%
No change 00% 00% 00% 00% 06% 05%
Inventory
Good offer 81% 86% 93% 88% 71% 65%
Limited supply 19% 14% 07% 12% 29% 35%
multiple offers
Yes 39% 37% 44% 40% 42% 43%
No 61% 63% 56% 60% 58% 57%
Activity
First time buyers 36% 25% 62% 31% 30% 24%
Raise and repeat 64% 75% 38% 60% 70% 76%
*California survey results are included in US and Western results.