There is so much talk about the real estate market these days that I often wonder what the typical homeowner is absorbing. For example, if somebody is thinking about selling their home (not absolutely having to sell, just considering it as an option), do they read all the different reports and analysis that are available or do they just “call a Realtor friend.”
Builders Must Sell 100% Of Their Inventory
If I were a homeowner considering selling my home today, I would want to know the success rate of homes sold versus homes listed in the local real estate market. Considering most homeowners assume once they list it with a real estate company it is practically sold, I would strongly recommend finding out what is really occurring.
Home builders realize that they must sell 100% of the homes that they build, yet in today’s market, most homes are not selling! Therefore, much like a builder would choose not to build a home that could not be sold, a homeowner should choose not to “list” a property at a price that will not produce a sale.
Measuring the percent of homes sold versus homes listed is a statistic that I track all the time. It is part of the continual study of the housing inventory that I consider vital in determining both the strength, as well as the movement, of the Tallahassee real estate market.
Look At The Short Term Trend And The Long Term Trend
The following chart shows shows trend lines, all measuring the success rate of homes sold in Tallahassee. Even if you do not live in Tallahassee, these statistics usually are reflective of what is going on in most markets in the United States.
What this graph demonstrates is that homes are selling roughly 38% of the time. The longest term that this study can track right now is 180 days due to the starting date. In the future, I will fee much more comfortable with a 1 year trend for the long-term. The shortest “short-term” shown above is the 30-day trend.
The graph shows the short-term trend is better than the long-term trend, which hopefully means that the market is improving. Unfortunately, with the long-term trend being on 1/2 of the year, we have to consider that seasonality might be a factor. Regardless, the results are telling us that somewhere between 38% and 48% of homes are selling.
Decide To Sell Only If The Price Is Right
Would a builder accept these results? Could a builder stay in business if less than 1/2 of the homes built were sold? I think not. The builder must build a product that can compete in the top 38% of the inventory or the builder will not build.
This is the way that the homeowner must think. What price point is required to be part of the 38% that will sell? If the price is unacceptable, then the homeowner must keep the home out of the inventory, as high inventories are driving down prices. Think like the builder and enter the market when you can sell your home.
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