News
October 9, 2016

Strategic pricing important in an improving housing market

 

By MARSHA STOWELL

Beginning a new year with a 26% increase in sales and a 6.9% improvement in the average sales price is awesome.

That’s what the January year-to-year Northeast Tennessee Association of Realtors’ Trends Report said about last month’s closing. It was also the ninth straight month sales have increased.

If you take a closer look at the data you can see sales increased in all but two of the 11 counties monitored by the report. It’s also noteworthy that Washington County, Tennessee had a little more than half of the area’s sales gains. Those data sheets can be found on NETAR’s Web Sites in the Trends category.

The other side of this good news story is the pace of sales is consuming inventory as fast as new listings come on the market. Simply put, finding a variety of homes is getting tougher while the average time on market is a little over five months.

Across the region, there were 6% fewer listings last month than there were January 2015.  That figure hasn’t changed more than a point in the past seven months. When look at the price ranges of this tighter market a clearer picture takes shape.

Homes in the $200,000 and below range are down 7%. That price range accounts for a little over three-fourths of existing home sales.

A step up to the $200,000 to $300,000 range shows the inventory pinch is 10%. Homes in that price range accounted for 21% of all sales last month.

Inventory in the higher ranges is better than last year.

You would think that a tight inventory would results in a stronger seller’s market. The average price has improved, but not in proportion to the sales increase, and "like sales" the average price varies from county to county.

For instance, although Washington County, Tennessee sales outperformed the region, the average sales price increase lagged what four other county markets recorded. Washington County’s average price was up a little more than $8,000 from January last year. That’s good news for sellers, but there’s mitigating factor. The difference between the average asking price and the average sales price was a little over $13,000 to the buyers’ advantage. 

Currently 35% of Washington County homes on the market are reduced listings. That simply means that the asking price for more than 1-in-3 listings in the county with the highest sales volume in the region had to be reduced because there were no takers.

Although Washington County has the highest share of reduced listings, it isn’t that much different from most other markets. Here’s what the current share of reduced listing looks like, according to Realtor.com

  • Carter – 30%.
  • Greene – 24%.
  • Hawkins – 26%.
  • Johnson – 20%.
  • Sullivan – 30%.
  • Unicoi - 25%.

The average home sold in the region last month was on the market for 173 days. One reason is the time it takes to market a home, reduce the price then re-market it at the reduced price.

The bottom line from these examples vs. a “sales are up, inventory is down so it must be a stronger sellers’ market” conclusion is the housing market is not always that simple.

Strategic pricing has become more important in the current market and sellers who list with that strategy are seeing much quicker action.

 What’s strategic pricing?

 It’s zeroing in on a price somewhere between the average listing price and the average sales price of comparable homes. There are ample examples of the homes that are priced right selling in a week, or less.

Some common traits among today’s buyers are they are picky, they are market price savvy and many won’t rush to a decision. At the same time vacancies of investor rental properties are running higher than normal and some properties are not commanding yesteryear’s rents. Also, apartment homes offering luxury amenities are competing with home ownership.

These fluid conditions are just a few examples of why most buyers and sellers partner with a Realtor to help them navigate the market to find opportunities that match their family’s needs and financial abilities.

Marsha Stowell is the 2016 president of the Northeast Tennessee Association of Realtors. The real estate education and trade group is the voice for real estate in the Tri-Cities and has over 1,000 local Realtor® members and almost 60 affiliates

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