Negotiation Leverage Sits With Today’s Home Sellers

NAR: Existing Home Sales Median Days On Market

Buy That House Before It’s Gone?

The housing market is near its strongest in a decade.

According to the National Association of REALTORS® and the Census Bureau, more than 6 million homes changed hands last year, marking the first time that’s happened since 2006.

The rise in home sales can be attributed to many factors, but three big ones include rising U.S. rents, which has changed the math of “Buy vs Rent”; loosening mortgage guidelines; and, stubbornly low mortgage rates.

Current mortgage rates average below 4 percent. ARMs are near the 2s.

Meanwhile, there’s an abundance of available low- and no-downpayment mortgage programs, including the brand-new, 3% down HomeReady™ loan which has widened the pool of potential buyers nationwide.

As a result, homes are selling quickly and at higher prices.

Click to see today’s rates (Jan 27th, 2016)

Existing Home Sales: 5.46 Million Homes Sold Annually

Each month, the National Association of REALTORS® publishes its Existing Home Sales report, a tally of sold homes which have been previously-occupied, or are otherwise not considered to be “new construction”

The trade group’s December 2015 report shows 5.46 million homes sold on a seasonally-adjusted annualized basis, a 15% increase from the month prior.

The sharp increase has been attributed to November’s delayed closings which resulted from a new real estate law known as TRID.

Meanwhile, there are now just 1.79 million homes for sale nationwide — the fewest in more than a year — which puts into numbers what today’s active buyers have known for months: the market for homes is highly competitive.

In December, Median Days on Market for an MLS-listed home was 58 days. This is the fewest number of days for December since the National Association of REALTORS® been tracking such data.

  • December 2011: 99 days
  • December 2012: 73 days
  • December 2013: 72 days
  • December 2014: 66 days
  • December 2015: 58 days

NAR reports that 32% of homes sold in 30 days or less in December.

Click to see today’s rates (Jan 27th, 2016)

32% Of Homes Sold Within A Month

The December Existing Home Sales report showed homes selling quickly. Homes typically sold in 58 days last month — an 12% decrease over the year prior.

But, while Median Days On Market remains an imperfect housing market metric, it can sometimes highlight the relative ease with which a seller can sell a home; plus, the relative difficulty a buyer may face in buying one.

Three main factors affect Median Days On Market — the economy, median rent prices, and national sentiment toward housing.

When the economy is performing well, for example, consumers may be more likely to take risks. One such risk is the purchase of a new home, whether as a primary resident, vacation home, or investment.

More risk-taking moves Days on Market lower.

Rising rents can also cause Days on Market to drop.

When U.S. rents are rising, it puts a strain on the budget of the nation’s renters. It also affects the answer to the question “Should I buy or should I rent?”

Median rent is up more than four percent nationwide. In certain housing markets, though, such as San Francisco and Seattle, rents are rising even more quickly than that.

A number of U.S. households have had enough.

Rather than signing new leases, they’re choosing to buy new homes instead. And, because many are buying “starter homes”, they’ve found the 5-year ARM to be an excellent budgetary fit.

However, there’s a third, less obvious reason why Days on Market can change, and it’s linked to home seller sentiment.

Sometimes, regardless of the market’s strength, home sellers just feel “less confident” in the market. Now is one of those times.

Is It Really “A Good Time To Sell”?

According to a Fannie Mae consumer attitudes survey, 49% of consumers now think it’s “a good time to sell” a home, up 1 point from the month prior.

When sellers think “it’s a good time to sell”, it’s typically because they believe housing is nearing a peak, or about to fall from one.

Either way, it’s good to be a buyer.

When sellers are concerned about their future ability to get top-dollar, it can result in homes being listed for cheaper prices; and being sold at “the first reasonable offer”.

The sellers may have it wrong, however. The market is performing quite well, actually.

According to the December Existing Home Sales report, there is just a 3.9-month housing supply nationwide and home supplies of less than six months are believed to put sellers in prime negotiation position over buyers.

So, although today’s housing market as one of the strongest in a decade, sellers are actually behaving like the market’s in a downturn.

Buyers, therefore, may find value in today’s home prices — despite that prices are rising.

What Are Today’s Mortgage Rates?

With mortgage rates below 4%, sales of homes are soaring amid fierce competition. The best deals you find in housing may be the ones you get today.

Get today’s live mortgage rates now. Rates are available with no social security number required to get started and all quotes come with access to your live mortgage credit scores.

Click to see today’s rates (Jan 27th, 2016)

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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