As sure as the sun rises, almost every time a Realtor® introduces themselves in a social situation these days, it is followed by this question..
"How is the market?"
I've heard a lot of different answers to this question, yet no matter how any given Realtor® might choose to answer that (which is another conversation all together) it seems that most people feel that it is in fact a BUYERS MARKET. But what exactly does that mean? Many people think that there are deals abound everywhere you look, or some similar terminology to the effect.
Most people have heard something in the news about slumping real estate sales, about how there is an excess of inventory on the market, and how homes and condominium units can be purchased for pennies on the dollar. Although that may be the case, even here in Nashville to some extent, there is an important factor I would like to point out.
Sellers may not be as negotiable as buyers might like to think.
The average sales price to asking price ratio (shown below as %CP/LP) in Nashville has remained pretty constant despite any change in the market. Here is a snapshot of the last 3 years.
I would venture to say that Nashville's real estate market, while certainly has been effected by the economic downturn, has faired better than some of the other markets in this country. We have sold 4,700 homes in Davidson County alone in 2010! The sales figures below show that there is virtually the same amount of average homes for sale year to date in 2010 as 2009 (200 more homes on the market per day than 2009) and 2008 (roughly 100 homes less per day). The biggest discrepancy is closed (sold) listings between 2010 and 2008. There were 4,702 closed listings year to date in 2010, as opposed to 6,054 homes in 2008, a 23% decrease.
The average sales price is down from $222,150 in 2008 to $202,832, but UP from $200,292 in 2009. See the figures below.
To summarize, YES, I do believe it is a buyers market. Prices are very low, and by the looks of the figures above, are trickling upwards. Mortgage rates are likely the lowest we may ever see in our lifetime, and the buzz in the industry is that they too will start to trickle upwards in the coming months. I think the best thing a buyer can do is be realistic when approaching a seller with an initial offer. It's clear that every seller is not necessarily open to a "low-ball" offer. PRICES ARE ALREADY LOW! Of course there are still opportunities where a low offer is appropriate, but the numbers support the notion that it is not common practice considering homes still sell for just a 4% discount off of the asking price.
Get a good Realtor®, a good lender, and talk about what homes are selling for in your particular area of interest, and discuss the appropriate terms of an offer.
One last little tidbit..... A 2% difference in the interest rate on a $200,000 loan is upwards of $200/month in mortgage payments. Rates are 2% lower than they were 2 years ago. Think about how much that adds up to in a 30 year loan.
by Jason Kaczmarski
The Ashton Real Estate Group of RE/MAX Elite
The Ashton Real Estate Group of RE/MAX Advantage
The #1 Real Estate Team in Tennessee and #4 RE/MAX team in the world!