Sunday, June 9, 2013
Good Time to Buy?
When a seller lists a house for sale, usually they have a price in mind that they hope to achieve. Sometimes it's a go/no go price by which I mean if they don't get an offer for that amount, they simply won't sell. But usually the primary driver for a seller is greed and optimism. When we experience a so-called seller's market, over a short time period prices escalate. For those of us who follow these things, the telltale is really the selling price (stated as dollars per square foot) of new construction. The professional builders lead the price curve in the seller's market. At the beginning of this cycle you see strong sales volume, but not an immediate increase in home values. As this cycle begins to mature, prices grow and inventory begins to shrink. Days on Market (DOM) goes down. Investors buy the crap because that's what's affordable. Builders can't keep up with demand. Individuals see significant profits. At the end of the cycle, DOM increases, high-priced inventory languishes, and buyers are tired of the super-inflated prices.