By now everyone has heard that the market is strong and homes are selling quickly, but is that true for all price points?
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We know that the real estate market is doing well and homes are selling quickly. However, are homes selling quickly at every price point?
In the chart above, put together by Trulia, starter homes, trade-up homes, and premium homes are shown and separated by the percentage of buyers searching for each type and the percentage of homes listed of each type. If you subtract the homes listed from buyers searching, we can see if there are enough homes available to meet the demand for each type.
For starter homes, we have a -5.7, which means there is not enough inventory and prices will go up. For trade-up homes, we have a -5.3, which also means there is not enough inventory and prices will go up. Both starter and trade-up homes are below demand.
However, for premium homes, we have a +11, which means the supply is greater than the demand. The upper end of our market is just not seeing the type of demand that the other two price points are. This doesn’t mean premium homes won't sell, it just means we have to price strategically and communicate on a weekly basis regarding foot traffic versus days on market.
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The demand for lower priced to moderately priced homes is much greater than the demand for higher priced homes.
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The next graph in the video above, provided by CoreLogic, shows the price appreciation by price category for last year. It shows very similar data compared to the Trulia report. We see that the demand in the lower priced to moderately priced homes, or starter to trade-up homes, is much greater than the higher priced or premium homes.
Sellers at the upper end of our market need to realize that their properties will sell, but they won’t move as quickly as the more affordable homes. For example, if your home is priced at $500,000 and there is more than six months of inventory in that price range, you won’t see value appreciate because your home would be in a balanced market.
If you have any questions about this topic or you are looking to buy or sell a home, please don’t hesitate to give me a call or send me an email. I look forward to hearing from you.
