By all accounts, 2019 is starting off different from previous years. Inventory is on the rise and buyers are not fully out buying homes yet. With three months of sales in the books, it’s not time to panic because the stampede is about to begin.
How This Year Is Different From 2018
- Homes For Sale Inventory: The first 3 months of 2019 has seen the number of homes for sale rise by as much as 14% at one point and the overall average percentage is just under 10% for Q1 2019. It is easy to see more homes on the market and say that more sellers have put their homes for sale, but the reality is that fewer buyers have been out buying and that is the real cause of the rise in home inventory.
The median list price of homes for sale during the first three months has also declined over last year by just over 2% at a median list price of $279,300. This tells me that the upper price end of the home sellers has waited until the weather cooperated and proof of this is an uptick the last couple of weeks in higher priced homes coming on the market.
- Pending Sales Index: Pending sales is often described as a forecast of market activity. In the home sale process, this is the action stage where a homebuyer and a seller have come to an agreement on price and terms and now each party is in the process of finalizing their loan process and making sure that clear title can be delivered at the time of closing. This is the time when we also see home sales fall through and that three-letter word “BOM” shows its ugly face (Back On Market).
For the first 90 days of 2019, Pending Sale counts have been off by as much as 15% in mid-February (SHOCK) and averaging out at the end of the quarter at 11% below 2018 accepted sales compared to Q1 of 2018. Interestingly the Average Price of the homes sold during the quarter are up slightly over Q1 of 2018 coming in at $223,300 however that number is trending downwards as the quarter comes to a close.
- Closed Sale Data: This is where the real estate market focus should be when determining the direction of home values and the activity of the overall market. Once a home goes under contract, it takes on average 30–40 days to go from offer acceptance to closing where title is transferred to the new owner. In our market where 41% of homes for sale are new construction and only 23% are new construction sales, the time to close on those are much longer—typically 120-150 days.
During the first quarter, the median sale price is up 5.1% over the same time last year averaging $196,700 for the quarter. The days on market continues to be low at 35 indicating that the buyers that were out there looking predominantly chose homes that were newer on the market. Not surprisingly, the number of closed transactions year to date are down around 11½% however that number will tighten up now that the landscapes have changed from white to green.
- Lastly, Months of Inventory: With the slower start to the selling season, the balance of inventory began to swell slightly. The first 30 days of the year bubbled into a balanced market which is defined as between 4 and 6 months of inventory and that is typical for the month of January. However, the overall average months of inventory for the quarter peaked at 3.9 months, still maintaining a Sellers Market for the first quarter of 2019.
Final Review Of 2019’s First 90 Days
The old saying “Slow and steady will win the race” applies this year. Home sellers that did put their home on the market during what many considered rough times with the weather, benefited financially from their decision as with less competition from other sellers, buyers had the opportunity to find that right home without having to necessarily be in a bidding war for it.
Now that the weather has turned, watch for an especially active spring market as many home sellers play catchup and homebuyers begin their annual pilgrimage to the land of the homes for sale. I suspect that my report for the 2nd quarter of 2019 will be one with higher sale prices, scrambling buyers and Realtors begging for inventory.