Moving into 2011, there are several trends worth paying attention to:
- Buyers are refusing to pay top-of-market prices. Quite simply, price sensitivity is enormous. If a home is nice and of interest, but overpriced by 2 or 3%, a buyer simply won’t offer. Last month in Briargate, the price differential (sold price divided by final list price) was 99.5%. In Central, it was 104%.
- There is really no such thing as an improvement or updating to a home any longer. Updating or improvements are expected and required for a home to sell at market value. A home that doesn’t have updating or improvements still might sell, but at a fractional percentage of market value.
- The buyers are younger than ever (47% of buyers in the last 12 months were first-time buyers. Average age of first-time buyers: 30).
- Sellers are wising up to these trends and getting increasingly aggressive with their pricing, matching it to market needs.
For the year, there have been 15,927 new listings (a 4% increase over 2009, but the pace of listing has slowed since August). There have been 7,554 sales (down 7.0% from 2009). In normal every day terms, a 4% gain here and a 7% drop there are incremental movements. That is not the case with these percentages. The probability of sale marketwide this year is 47.4%. At this time last year, the probability was 53.0%. That is a 10.6% difference in probability. That means it is an additional 10% MORE DIFFICULT for a seller to sell their home this calendar year than the previous year.
That 10% is expressed in Buyer’s Actions. Buyer’s are:
- 10% more price-conscious
- 10% more suspicious of defects
- 10% more demanding of perfect condition
- 10% more likely to expect updating carpeting, paint, lighting and plumbing fixtures
- 10% more likely to associate this “updating” as “standard” and not as “improvements”
The big question moving forward in 2011 is who the buyer will be. Will the buyer be as tough and as demanding as the 2010 Buyer? Will the buyer be making cold-hearted economic calculations on every single decision? Or will the buyer be a different buyer, one who is moving on with life and has to actually buy something to change a situation that is no longer tenable? (job relocation, expanded family, marriage, divorce, long commute, change in lifestyle… you know, the reasons people used to buy homes)