What a great start to another year for real estate on the Outer Banks! After ending another record year in 2012 we were expecting big things for 2013. So far there are a few interesting trends to take note of.
It’s hard to tell exactly what caused home sales for the first quarter to be down 18%, but the good news is for March, properties going under contract are up 7%. I’m also slightly surprised by the average sale price being down 11% over the same period last year. There is still time for that to level out. One thing is for sure, if you are waiting 12 months before selling your home, you could end up regretting that strategy.
It’s clear this recovery isn’t going to happen quickly. For example, consider the following scenario…If your recommended price today is say, $500,000 and the market starts to appreciate as early as 2015 at a NORMAL rate of either 2% or 5% per year, take a look at the length of time it will take to just reach $550,000.
|
Today’s Recommended Price: |
$500,000.00 |
$500,000.00 |
|
| 2013 – 0% appreciation |
$500,000.00 |
0% |
$500,000.00 |
| 2014 – 0% appreciation |
$500,000.00 |
0% |
$500,000.00 |
| 2015 – 2% appreciation |
$510,000.00 |
5% |
$525,000.00 |
| 2016 – 2% appreciation |
$520,200.00 |
5% |
$551,250.00 |
| 2017 – 2% appreciation |
$530,604.00 |
5% |
$578,812.50 |
| 2018 – 2% appreciation |
$541,216.08 |
5% |
$607,753.13 |
| 2019 – 2% appreciation |
$552,040.40 |
5% |
$638,140.78 |
| 2020 – 2% appreciation |
$563,081.21 |
5% |
$670,047.82 |
| 2021 – 2% appreciation |
$574,342.83 |
5% |
$703,550.21 |
It can be a minimum of 3 to 6 years! Consider your carrying cost during that time frame, are you really better off to wait for that price or go ahead and sell now?
So the question becomes what will it take to turn this market around? The biggest challenge we face today isn’t distressed sales, it’s supply and demand. Right now we have over 3000 properties for sale and 143 buyers a month (based on a 3 month average). That means if no other home is listed for sale it would take 21 months to sell of what we have right now. And on top of it there are 435 new listings coming into the market each MONTH!
I don’t want to paint the picture of gloom and doom, because our market is far from that. I can absolutely guarantee that if you price your home competitively I CAN SELL IT!
In a market full of many choices for a buyer, the buyer is going to purchase the home they perceive as the best value. There are 4 factors that determine value.
- Location – this has always been the case for real estate. The better the location the higher the price. However, recently we’ve noticed buyers don’t make the decision solely on this factor anymore.
- Condition – with funds being tighter, insurance costs going up buyers are less likely to buy a home with maintenance issues.
- Amenities – what can your home offer the buyer that the others you’re competing with can’t? Do you have a view, new furniture, a pool, hot tub, deeded beach access?
- Rental income – most buyers are going to want to know how this home will support itself. The less of 1 through 3 you have, the less income, the less value to a buyer in most cases.
The moral of the story is to be the best value you have to have MORE for LESS. That’s how you stand out in a market with massive inventory and guarantee a sale.
For information on what your home is worth, contact me today!
