Housing Market Report: Buyers, Home Mortgage Applicants Entrenched in Driver’s Seat
It was only two years ago. Properties rarely remained on the market for more than a month, owners earned top dollar on their asking prices and mortgage loan applicants outnumbered sellers by a three-to-one margin.
Now, however, sales have slowed down considerably. Buyer incentives, a more relaxed timetable and flat price appreciation are making the hunt for a house less stressful for the consumer.
To discover what happened - and when - one has to only review the last nine “Current Market Conditions” quarterly national surveys conducted by HouseHunt, Inc., a consumer-oriented Internet firm that supplies free information and services to homeowners, home buyers and home sellers through more than 1,500 member agents in 47 states.
Time on the Market
This is the period of time needed between listing a home and signing a sales contract. In the third period of 2004, three out of four homes were selling in less than 60 days - and 51% of those were selling in less than 30 days.
A major change occurred in the first quarter of this year, when only 45% of homes sold in less than 60 days. This ratio widened this fall. Currently, only 26% of homes sell in less than 60 days.
Buyer-Seller Ratio
In the third period of 2004, buyers outnumbered sellers by a 66%-14% margin. The remaining 20% reported a 50-50 ratio. The buyer-seller ratio dropped to 48%-30% in the fourth quarter of 2005, with 22% reporting 50-50. Currently, the trend has reversed to 52%-36% more sellers than buyers. Twelve percent say it’s 50-50.
Inventory of Unsold Homes
This category has been steadily growing since the first quarter of 2005, when 36% of member agents reported a “good supply” of unsold homes as opposed to a “limited supply.” This estimate increased dramatically to 81% in the first quarter of this year and current stands at 89%. This inventory includes both existing and new homes.
Sales Price vs. Asking Price
Another critical measurement of housing supply and demand. In the third quarter of 2004, nine of 10 of sellers said they were getting more than 95% of their asking prices. Many reported more than 100% of asking prices.
The margin steadily decreased for the next six quarters, dropping to only 75% in the first quarter of this year. Currently, only 51% of sellers say they are getting 95%-100% of their asking prices; it’s easier to apply feel confident when you apply for home loans if you know you don’t need as expensives ones as the past.
Multiple Offers
Common in super-heated sellers’ markets, multiple offers tend to drive prices up until demand exceeds supply. Multiple offers have flip-flopped from a 79%-21% ratio in the third quarter of 2004 to only 25% currently. Biggest drop-off occurred in the fourth quarter of 2005 and the first quarter of 2006.
Annual Price Appreciation
In the third quarter of 2004, one-half of member agents responding to the survey reported annual price appreciation of more than 10%. Eleven percent estimated 5%-10% and 38% reported 0-5%. None reported price decreases.
A significant change occurred in the first quarter of this year, when only 25% reported increases of more than 10% and 54% reported 0-5%. Currently, only 11% are reporting increases of more than 10% and 33% are reporting price declines.