Like many Real Estate Professionals, I have been amazed at the current pace and intensity of the Real Estate Market. While there has been a softening in Condo and Townhouse sales, Single Family Homes are moving at a dizzying pace. Regularly I hear from new clients something to the effect of – I have been looking on Zillow/Redfin/HomeSnap/…, and every time I see a house I like, it is gone the same day or within a day or two; what’s going on! Short Answer: Inventory!
You may have seen your local Realtor post this cute Meme.
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Being a bit of a data wonk, I can’t help but Geeking Out a bit and put these anecdotal reports to the test.
In Montgomery County, MD (where I do the majority of my business), the MLS data clearly shows homes are moving fast. Days on Market (DOM) for Q4 2019 was at an average of 35 days and a Median of 22 days (8 -10 percent decline over Q4 2018). Now look at Q4 for 2020 – Average Days on Market was 20 days, a 42.9% Reduction and Median Days on Market was 8, a 63.6% change!
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The next question I am usually asked is – what’s causing this. One could write a book (or future blog posts) on the interplay of historically low-interest rates, low inventory, and COVID-19 but on a basic level, it is about supply & demand. As inventory drops, the absorption rate (Closed Sales) skyrockets; more people are competing for fewer houses, so houses sell faster, for more money, and with fewer contingencies! AKA a Seller’s Market!
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If you are selling your home, please make sure your agent understands and walks you through the absorption rate of comparable homes at differing price points and how that is likely to impact your DOM and bottom line. It is a seller’s market, but if you are a buyer, that doesn’t mean you are out of luck! A good Realtor can use data like this to target your next home strategically. If you would like to learn more about how we can use data like this to sell your home and/or provide you with a competitive advantage in negotiating your next, give me a call!