Buying or Selling a Home in the Desert…In the Summer…

What is Too Hot for a Cool Market?

One of the most frequently asked questions we have received lately from buyers is “if I wait until the weather gets hot, will I get a better deal?” Likewise, the most frequently asked question from sellers is “If I wait until after the summer, will I get a higher price?”

The answer in most cases is No and No. First a little background on the housing market in the Desert.

For quite some time, we saw record appreciation in home values. Prices were increasing at an unprecedented rate. Buyers drove the prices higher and higher through flipping and overbidding, property owners began to expect that such increases would never end and sellers chased the price curve up.

When the housing market began to level out, sellers continued to expect that their properties were increasing in value at the same pace as they had been just a few months earlier. Sellers continued to try to price their homes above the most recent comparable sale, and the offers did not come as expected. Very slowly, some sellers began lowering price and the eventually began to chase the price curve down. Their homes stayed on the market for 6 months, 9 months…a year, but they were stale. On the other hand, a few savvy sellers saw that prices were not going up, priced their properties lower than the last comparable sale, sold at a good price in a reasonable period of time and made out like bandits again.

We now are seeing many of the less motivated sellers remove their stale listings from the market, thereby cleaning out the deadwood and unreasonable listings. Those properties that continue to remain on the market or come on the market as new listings are a little more in line with what the market is actually doing. We have turned down a number of listings recently because the sellers just wanted more than what the current market conditions will allow. Now is the time to price a property right from day one (see the April 30 article “The Importance of Pricing Right From Day One” in the Newsletter at ThomasAndDrake.com).

For our buyers, we try to explain that there are ready and motivated sellers and there are those sellers who have listed their home, have no motivation to sell and will only sell if they get a certain price.

For our sellers, we try to explain the same thing. There are investors making ridiculous, low-ball offers on properties, hoping to hit on one or two who are desperate enough to sell at their offering price. There are also buyers who are buying homes because the timing is right for them and still others who are buying because they have recently relocated to the area and need to buy a house.

So, here is the answer to our questions above:
Although summertime in the Desert brings fewer shoppers overall, the ones who are out tend to be more serious and ready buyers. Although many sellers take their homes off the market during the summer, others hope to attract the buyer who is on a time line and can’t wait until the same old stale listings that didn’t sell all winter hit the market again in September.

Overall, it is still a great time to buy: interest rates are still near historic lows, there are many homes to choose from and real estate remains one of the best long-term investments available.

-Gary Drake
The Thomas and Drake Group