The Why’s and How’s of today’s local real estate market explained…
Why are some homes selling faster than others? Obviously having your home prepped and looking good, staged and utilizing a powerful marketing and action plan is huge. But in addition to that, there is way more to the equation.
Let’s first talk numbers because the numbers never lie.
The Same Amount of Closings
As of this writing, year-to-date in 2024 compared to the same time in 2023 there are the same exact amount of closings for single-family homes, condos and townhouses, a total of 70. So when you look at this stat only, it appears that we are doing the same as we did last year. But actually, we are not.
More Homes For Sale
This year we have had 127 listings YTD versus 78 last year. That means there are 63% more listings this year than last year at the same time, that is 2 more listings per week. This means that more sellers are competing for the same buyers than they were last year so sellers this year have to be more strategic with price, property condition and marketing. Simply put, buyers have more to choose from and they know it, and they are taking their time.
What’s Hot
Homes under $1.5 million are the hottest price point right now. At this time, 44% of homes in the $1 million to $1.5 million in list price are already pending-contingent. Meaning they have an offer accepted and are in escrow. That is an exceptional stat, very telling of what buyers are gravitating to today.
Everything that I have listed in this price point has either sold above asking price or at a record sales price. Several have set record sales prices this year.
- This townhouse sold at a record breaking price of $1.2 million in the second quarter of 2024
What’s Warm
Homes that are in the $2 million to 3 million price point have a pending sales ratio of 29% which is not bad actually as a 33-38% pending sale ratio is considered a really good market for home sellers.
The homes that are pending in this price point however have taken some time to get into contract with an average of 66 days on market before they went into contract.
What’s Taking a Little Longer to Sell
Homes that are in the $1.5 million to $2 million are sitting at about a 15% pending sale ratio.
Why? There is a reason for this and it has a lot to do with interest rates and the homeowners insurance rates that also factors in to a buyer’s qualifying ratio. And if you are thinking rates are the same for almost all price points that is somewhat true as long as they are the same terms, although higher loan amounts can many times have a little higher rate. But the buyer dynamics change when it comes to different price points.
Let me explain…
The hottest price point are the homes at $1-1.5 million because they are the most affordable that will usually give you popular 3-4 bedrooms and buyers in this price point are more conscious of rates and insurance payments. Many are buying for the first time and most buyers right now are being conservative and buying at lower price points.
The moment prices are over $1.5 million to $2 million, the current mortgage and insurance rates make it a little more cost prohibitive for the average buyer to buy at this price point so they are being more conservative and keeping the price point lower or they are just being more picky and careful of what they buy. These homes have to look great, they have to be priced right and sellers need to know that there may be some negotiating that will be needed to sell their home.
The moment you hit the $2 million plus price point, such as the stats I showed above that were between $2 million to $3 million, many of those buyers although they are indeed concerned about mortgage and insurance rates, many are buying with large down payments or are very high wage earners, or both. So higher mortgage and insurance rates are not that much of a determination to many of the high end buyers.
Getting back to the $1.5-2 million price point; there are exceptions where some homes are selling faster in this price point because they are many times priced exceptional, are updated or sit in a neighborhood that is desirable where very few homes come on then market, so it is indeed important to both understand that you need to price it right and you need to be patient, have a good marketing plan and just know what your price point is doing. Prices are holding their own, they are just taking longer to sell. And sellers in this price point may be willing to negotiate more than in other price points that are hotter at the moment.
The “Luxury” Price Point
Currently there are 4 homes for sale over $3 million with one out of four in pending status, so 25% of that price point is in contract.
Closing Thoughts
One more very key point is that at the time of this writing, we are just past the 3rd week of June and typically this is a time when many people and families are just finishing their graduation celebrations, vacations and really enjoying the start of summer. It happens almost every year in June when people are doing other things other then home shopping but I expect that over the next 2-3 weeks you will see more people coming back into the market as they start getting back to their normal routine and for some, that is needing to find a home.
Knowledge is power, understanding what is taking place not just in your price point but all price points is important if you are selling your home. This will help you plan ahead and help you understand what is taking place abroad and not just with your home, which is important because we many times just see what is happening with our property. Being aware helps you understand where you are and what to expect.
In addition, if you have a property under the $1.5 million range and are in need of moving up and your dream home is in the $1.5-2 million price point, it may not be a bad strategy to do something while your home is a hot property right now. Sellers in the $1.5-2 million range are negotiating now more than ever and that could benefit you.
As always, happy selling and happy buying!
Robert Aldana
REALTOR® since 1986
DRE # 00921165
Keller Williams Realty
831-252-3959 Direct Line
[email protected]
www.robertaldana.com
ABOUT ROB: Robert Aldana is a 38+ year licensed real estate veteran with Keller Williams Realty, and also a long-term resident and homeowner in Scotts Valley.
Robert is the agent chosen by more Scotts Valley area home sellers and buyers than any agent or team, and has been awarded the Santa Cruz Sentinel Readers Choice Award as the Best REALTOR® in Scotts Valley for four straight years, along with being voted Best Scotts Valley REALTOR® in the Press Banner and Fav Neighborhood Agent numerous time on NextDoor.
Robert is also the ALL-TIME leading real estate agent in Scotts Valley.
Read almost 100 “Five Star” reviews at www.robertaldana.com/testimonials