Homes selling for more than List

Just the Facts

New Housing Boom Mantra - Paying More Than List

It all seems long ago now – the casual home shopper, the drives to check out the neighborhood, the luxury of sleeping on the largest decision you’ll ever make.  Trying to buy a home now feels more like being thrust into the trading pit at the Chicago Mercantile Exchange – the frenzied bidding, the need for lightening fast decisions, the packs of serious shoppers at an open house.  In one fraught situation, a home near Union Station in Washington, D.C., drew 168 offers in December and sold for almost twice the asking price. In the tonier neighborhoods of Los Angeles, 20 bids per house is not uncommon, according to real estate agent David Kean. And the speed of deals can be intense. "In the middle of a snowstorm we have seen houses sell in one day," says Sam Schneiderman, owner/broker at the Greater Boston Home Team agency. "At open houses on million-dollar homes you are literally bumping into people, it's that crowded."

A dearth of homes for sale has run smack into a suddenly energized buying crowd egged on by rising values. The National Association of Realtors says the number of existing homes on the market in January -- 1.74 million -- was 25 percent lower than a year ago, and the lowest level since 1999.  Price is obviously the main lever in all deals. What’s particularly important now is to understand how the seller will handle bids. Some collect all bids and immediately choose a winner, typically the highest offer, which is often more than the asking price. Other sellers give the top three or five bidders the chance to make one counteroffer. In those instances, you want to get into the bake-off but leave yourself room to counter.

In today's tight market, some sellers are asking every bidder to counter. That's what happened to a client of Schneiderman's in the recent sale of a house in Newtown Center, Massachusetts, listed for $975,000. The seller got nine offers -- four to nine offers is the norm now, Schneiderman says -- and asked for counter bids on all nine. Schneiderman's client bid $1,016,000 and lost. The seller's agent said the winning bid was "significantly higher."

       -        Bloomberg News, March 1, 2013

RE/MAX DFW Associates Has High Customer Retention

Based on  postings of source of business, the agents at RE/MAX DFW Associates report 40 percent of all home sales are repeat business – clients whom the agents have worked with in the past.  Most importantly, over 80 percent of all RMDFW agents reported a repeat business sale or listing in 2012.  This is an extremely high rate in the industry.  RISMedia Magazine in their surveys report:

1)      Six percent of agents with 3 to 5 years of experience received repeat business last year.

2)      Agents with 6 to 15 years of experience, the number is only 17 percent for 2012.

3)      Only 38 percent of agents with over 16 years of experience received repeat business during the previous calendar year.

Most real estate agents do not make an effort to maintain a solid relationship after the closing.  Yet every closing is a huge opportunity for referrals and future repeat business.

-          RISMedia Magazine, February 28, 2013

Record National Home Sales in January

January posted a 4.5% increase in previously owned home sales in January, and new homes posted a 16% increase.  The only month better than January 2013 in the past six years was April 2010 – the last month of the federal tax credit.   The increase is the latest positive report for the housing market, which began recovering last year after a deep, six-year slump. Steady hiring and nearly record-low mortgage rates have encouraged more Americans to buy homes.  Home prices, meanwhile, rose by the most in more than six years in the 12 months ending in December.  Steady price increases are also contributing to the housing recovery. They encourage more people to buy before prices rise further. Higher prices also build homeowners' wealth, which can spur more spending and economic growth.

       -      Associated Press, February 27, 2013

Prices in DFW are pushing UP

Just the Facts

Why Home Sellers Are Seriously Scarce

The lack of home sellers as the spring selling season nears is of little surprise.  Nationwide, the supply of existing homes for sale has fallen for seven straight months.  Competing multiple offers abound with most of the country now a seller’s market, just one year into a housing recovery following the worst downturn since the Great Depression.   The shortage of sellers is expected to ease as home prices rise.  Many homeowners cannot afford to sell because they do not have enough equity to put into another home.  Some potential sellers are waiting for the prices to rise a bit more.   Many have learned to be content during these past few years of the national recession.  They have simply rearranged their priorities and decided their current home is fine.    Major companies have nixed potential employee relocations.  And some are simply concerned with our national politic malaise.   But with all of this – economists predict sellers will sell again, and soon!

-          USA Today, February 27, 2013 and Wall Street Journal, February 27, 2013

Builders Fuel Home Sale Rise

Sales of new homes are surging in the U.S., far outpacing sales of existing homes and creating an unusual disparity in the housing recovery.   The trend partly reflects the small inventory of previously owned homes, now at a 13 year low.  But the strong sales of new homes also show how the nation’s home builders have mastered the art of selling.  New home sales jumped 28.9% in January from a year earlier, as sales of previously owned homes rose 9.1%.  This desperate selling pace exists even though a typical new home costs 37% more than one already built, the widest gap since figures started being tracked in 1968, according to Barclay’s Capital.   In the past two years, more builders have offered to pay closing costs and arrange home loans through their in-house lender, and made heavy use of government backed loans with little or no down payment.   Over three times more new homes today are sold with an FHA mortgage than just two years ago.  The result – it is easier to buy a new home, although the better value may be an existing previously owned home.

-          Wall Street Journal, February 27, 2013

Investors Driving Up Home Prices

During the housing bubble, investors played a significant part in overheating home values.  And when all the air went out of the home market, the mortgage companies and ultimately the economy were left holding the bag when the investors bailed out.  Now that housing is picking up steam again, investors are back buying up thousands of homes in North Texas and across the country.  Indeed, a flood of dollars (by investors) is driving up home prices and dramatically reducing the number of homes for sale.  And while most of the purchases are for cash, what happens five years from now if many of these investors cash out of their deals?  The numbers are just huge.  In some markets, investors are 20% of home sales.  In other markets, it is much more.

-          Dallas Morning News, March 1, 2013

Dallas Projected 25%-30% Gains

Just the Facts

Dallas Projected to Have 25%-30% Home Price Gain

Over Next Three Years

Two recent respected studies, one from a federal agency and the other from one of the most respected world banks, show that home prices will increase in most, but not all U.S. cities over the next three years.  Both reports show that Dallas is poised to have the largest price gain over the next three years of any American city, due to its significant expected population growth.   Houston and Denver also rank high in expected price gain.   Some major U.S. cities are still expected to have declining home values.

71% Believe Their Home Value Will Go Up in 2013

What a change a few months make.  In December polling, some 71% of Americans believe the value of their home will increase in 2013.  That is up from only 37% that believed that just ten months ago.   With that optimism, Americans are beginning to “move-up” again – selling their existing home and buying a large home.   The percentage of first time home buyers is stable, but with the increase of move-up buyers, the real estate market is hot in almost every part of the United States.     Virtually every market saw a 5% to 25% increase in home sales in 2012, and that number will surely increase in 2013.

-          Real Trends Report, January 12, 2013

Home Affordability Record in 2012

The National Association of REALTORS announces that 2012 was a record year for housing affordability.  NAR’s national Housing Affordability index stood at 198.2 in November, based on the relationship between median home prices, median family income and average mortgage interest rate.   The higher the index, the greater the household purchasing power; record keeping began in 1970.  An index of 100 is defined as the point where a median-income household has exactly enough income to qualify for the purchase of a median priced single-family home.  Housing affordability was 184 in 2011, and is projected to drop to 160 in 2013, due to rising home prices and increased government regulations.

-          REALTOR Mag, January 2013