Based on the low number of closed sales and increased listing prices, it seems the real estate market has leveled off more than sellers are willing to accept.
Like last month, we again saw a 19% drop in home sales over the same time last year. April 2019 came in with just 272 home sales compared to 336 in April 2018. Active inventory is up 21% since last year, rising from 1,749 to 2,119.
Higher available inventory means more seller competition, and therefore lower prices, right? Well no, as it turns out. List prices just keep going up. Newly listed properties averaged $702,613, an almost $40,000 increase over last year’s average of $664,454. The kicker? Homes sold for only $555,891 last month.
With an average list price of $709,109 for all active properties, this means homes are actually selling for 22% less than sellers list them for. And with the average list price for sold homes at $577,744, it’s safe to assume that the higher priced segment is not moving as sellers expect it to either.
The Pitfalls Of Overpricing Your Home
So you are ready to put your home up for sale. This scenario may play out much differently than you expect.
Your realtor tells you what your home is worth to buyers, but you know better. The market has been rising so much for the last few years, you’re insulted by the figure they gave you. You decide to price your home $100,000 higher because, even if you don’t get the full asking price, the offers will come in higher. You’ll avoid lowball offers and attract the right kind of buyers this way.
Then you notice "For Sale" signs popping up all over your neighborhood. Apparently more people want to get in on this gold rush now and you’ve got lots of competition. Ultimately, you don’t get the amount of showings or offers you were expecting. So you assume your agent is not marketing your property, and you sign up with a different broker to (hopefully) get the job done. Or your listing expires and you don’t relist at all. You’re left feeling defeated.
In the real estate field we see this happen all the time. The seller may drop the price some, but it’s not enough to stand out from rising competition. Newly listed home prices are up by $40,000 from last year, while sold home prices are down by $18,000.
Listings that do get sold (which were just 272 for two months in a row) are sold with a pragmatic approach and price. Sellers must accept that neighborhood comps from one or two years ago don’t create a never-ending trajectory of rising home prices. Inventory is rising every month and foreign investors have largely stopped bidding.
These are not conditions that cause home prices to rise, but sellers in New York seem to be using a different logic.