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Riding the Rollercoaster: Is it a Seller's Market or a Buyer's Market?

Riding the Rollercoaster: Is it a Seller's Market or a Buyer's Market?

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By Elaine VonCannon, ABR, SRES, Associate Broker, Notary, Team Leader, Property Manager, Award Winning Agent

Is it a seller's market or is it a buyer's market in real estate this year? I say both. This question is posed repeatedly, and answers may vary. In my regional market, Williamsburg and Richmond, Virginia, it is an equal market for buyers and sellers heading into peak sales periods in the spring and summer seasons.

National Association of REALTORS (NAR) Home Sales Statistics

The National Association for Realtors (NAR) reported in April 2014 housing sales and price depends upon the geographic area of the property location. For example, inventories are low and housing is in demand in the Boston and San Francisco real estate markets, driving prices higher quicker. But in Florida, housing prices and home sales are just beginning to recover after years of decline during the recession.

Virginia Association of REALTORS (VAR)

The Virginia Association of Realtors (VAR) statistics report there is an increase of over 17% from March to April 2014 in Virginia real estate market sales, a trend in keeping with previous spring seasons followed by snowy, icy winters. Yet overall Virginia home sales are down by almost 3% compared to April 2013.

The good news for sellers in the Virginia market is that the median sales price for a home is up by almost 3% compared to April 2013, an indicator that market prices are stabilizing. According to the VAR research by the Virginia Center for Housing Research at Virginia Tech, “These numbers indicate that housing prices have recovered in Virginia and have reached a fairly stable level. We expect prices to increase at a moderate rate throughout the spring, as long as inventory increases at an adequate rate to meet demand.”

Inventory is a crucial issue that affects pricing in many markets but it impacts Virginians from all areas of the state quite differently. While Northern Virginia homebuyers may be experiencing bidding wars due to low inventories in some areas, people searching for homes in Southeastern Virginia are experiencing a shortage of inventory in median priced homes ($180,000-350,000). Lack of available choices may put a damper on the decision to buy, but there are not currently bidding wars in the Southeastern Virginia real estate market.

Inventory problems in median priced homes reflect the current Williamsburg real estate market's status quo. So many homeowners are still underwater. Whether they purchased homes at high prices or refinanced, they cannot sell. Sellers that do place their homes on the market need to make sure features are updated – or the price tag has to reflect a lack of updating. In some cases, homeowners that have cosmetic issues (not structural or mechanical) may have to cut listing prices by as much as $10,000-30,000 in order to sell in this market. It's no longer a market where you can just put any home up for sale and expect to sell it in 90 days. Ideally, improvements need to be made prior to placing a home on the MLS.

Request a Custom Market Analysis (CMA) from a Licensed REALTOR

Do not rely on a home's assessment value, or the sale of the home right down the street to accurately price a property. The best way to determine an actual fair market price for any home is to ask a REALTOR experienced in your regional market to perform a custom market analysis. The realtor will examine home sales within a 1-2 mile radius that are comparable to your own home and will let you know the real market value.

What Price to List?

In my opinion, sellers need to get in reality about their home's listing price. Many sellers need to either make improvements or lower the listing price, so they don't miss opportunities to sell a home because it is priced inaccurately or is not adequately updated. I have seen too many homes sit on the market for far too long, for just this type of reason.

There are still vacant homes that are foreclosures and bank owned properties on the market. Many homes have been vacant for some time. When a house is not occupied and nobody is there to see the small repairs, leaks and maintenance nuances going on it will inevitably fall into disrepair. Homebuyers will stop looking at these homes as the stale listing becomes 'shopworn.'

Sellers and Buyers Can Meet at the Table

Sellers must face reality AND buyers must also look more closely at today's real estate market in order to obtain the best price on a home. The days of bidding low on a property purchase by $30,000-50,000 or even more are over.
Some buyers I have worked with think they can find a home with 100% of the amenities they desire in the price range they want to pay. Because of low inventories in some markets, these homes don't exist. Buyers become frustrated- and this is understandable.

Be Open to Making Cosmetic Changes on the Home

Taking a thorough look at the home market in Williamsburg and Richmond, Virginia areas, I can say that finding a home is easier if buyers are willing to purchase a home and tweak it as they go along, performing upgrades slowly. I recommend sellers accept homes that are not 100% everything they want or cosmetically perfect. However, these homes must be structurally and mechanically sound. If home buyers can make some concessions in covering closing costs or take responsibility for making upgrades after home purchase, many more homes for sale in Virginia would have “sold” in the initial three months on the market.

By all indications, the real estate market nationally, and in my region, is stabilizing and prices are on the rise – albeit slowly – while inventory is flagging in some areas. Buyers and sellers who want to complete home sales have to get together on the transaction to make it work. Compromise and concessions are the keywords of this 2014 real estate market.