The president of my company (Ken Meade Realty Inc) Steve Meade just wrote this article for the company newsletter, THE KEN MEADE REALTY Report. It contains some valuable information for all who are interested in buying or selling real estate at this time.
DOES MARKET TIME TELL US WHICH HOME TO BUY?
The number of days a home was on the market in the third quarter of 2007 averaged 173 days in Sun City Grand and 174 days in Sun City West, In Sun City, the average market time during that period was 129 days, while Surprise averaged 121 days and the Phoenix Metropolitan Area averaged 113 days.
Statistics can be interesting to look over, but what do they really mean? Is a home that has been on the market 10 days a better buy than a similar home with a current market time of 210 days? Should a buyer avoid making an offer on a home that has been for sale for 310 days and look for something with less time on the market? Or, should a savvy buyer request to see only homes that have been on the market for more than 6 months or a year in hopes of making an incredible deal?
The average market time tells us a considerable amount about overall market conditions. It does not necessarily tell us which homes to look at or the best home to make an offer on.
A short average market time, like 30 or 45 days, indicates that there are numerous buyers for the number of homes on the market and that homes have, on average, been selling quickly. This is often referred to as a 'Sellers Market.' A longer market time, like 180 days, indicates that there are fewer buyers for the homes available and that, on average, homes have been taking longer to sell. This is often called a 'Buyer's Market.'
In a 'seller's market,' of course, we can still find homes that didn't sell at all or took much longer to sell. And, in our current 'buyer's' market,' some homes still sell within a few days or weeks.
Average market time does not actually tell us whether only a few homes or many homes sold, only the average time it took those that sold to get an offer. Average market time also does not tell us if there is a large supply of homes on the market or very few homes for sale. Generally, however, there is a much larger number of properties for buyer's to choose from in a 'buyer's market.'
Knowing that we are in a 'buyer's market' tells prospective buyers that many homes have been on the market for a substantial period of time. When a buyer compares homes, however, market time alone does not indicate that one home is a better buy, or more desirable, than another. It also doesn't tell us that one seller is necessarily more motivated than another.
As an example, let's say a prospective buyer looks at two very similar homes and that both are priced at $247,000. One home 'property A, came on the market 10 days ago. The other, property B, has been for sale 210 days. Many prospective buyers might think that property A is the more desirable property because it just came on the market. Market time, however, doesn't necessarily indicate value. Perhaps property B has been seriously overpriced, but was recently reduced. Or, perhaps the sellers of property B just replaced the carpet, painted the exterior, had the interior professionally cleaned and the yard groomed. Reducing the price substantially or dramatically improving the condition really makes property B a different home than the one that racked up all those days on the market.
Our prospective buyer may think that the owner of property B will be more motivated than the owner of property A. While that may be true, it isn't always the case. Property owner A may have placed their home on the market at an attractive price because they truly need to move and are highly motivated. Property owner B, on the other hand, has just reduced the price or made improvements to the home and might feel the home should now attract considerable interest. Therefore they might, or might not, be as highly motivated as owner A.
By looking at recent sales comparables, the prospective buyer can probably determine how much properties similar to homes A and B have sold for recently. This data, in my opinion, is far more important than the number of days a home has been on the market.
Jim Little, your Sun City REALTOR®
Please visit my Web Site, suncityneighborhood.com where you can search the MLS with no registration for free.
