The biggest challenge to any real estate transaction is emotion. Any transaction around one's family home-or future home- is bound to be frought with expectation, hesitation and stress. Removing that emotion from buying or selling a house, if it were possible, would make a real estate transaction more like buying or selling soy bean or oil futures. The process becomes simpler, swayed less by how one feels about the memories made in the home or the dreams tied to its purchase. Suddenly the process is simply about maximizing an investment.
Taking as much emotion out of the real estate transaction as possible is exactly what is called for in 2018.
Bucks County real estate-and for that matter many of the surrounding Pennsylvania and New Jersey counties-is facing yet another year of dramatically low inventory.
According to Trend, while the number of closed sales for the fourth quarter of 2017 is nearly on par with that same period from both 2016 and 2015, the number of homes available for sale has dropped dramatically. from a high of 2,836 homes available for sale in the fourth quarter of 2015, Bucks County closed 2017 with only 1,708 homes available for sale. Currently there are only about two and one-half months of suply in all of Bucks to meet current demand.
Meanwhile, the median home price in Bucks rose at the end of 2017 by more than 7 percent compared to the prior year, reaching $300,000. te average sales price in Bucks rose to $350,672 or nearly 5 percent above the prior fourth quarter figure.
Mirror findings from recent research conducted by Trulia and Zillow, Addison Wolf Real Estate predicted at the end of 2017 that limited existing home inventory would be the defining factor of the 2018 real estate market. And while housing starts are up, builders haven't kept pace with demand, especially at the market entry point for first-time buyers. In Bucks County specifically, a high concentration of preserved land further restricts new housing starts beyond many of the national statistics.
For buyers interested in purchasing a single-family home this year, removing emotion from that first-time or dream home purchase will be central to a successful transaction. Focusing on key market metrics, such as days on market and asking price versus selling price will help buyers better understand their negotiating position as well as the potential for competing against multiple offers.
For prospective sellers, 2018 might be the ideal year to sell even if the timing isn't exactly perfect, for a number of reasons.
First, buyers who have been on the sidelines waiting for opportunities or circumstances to dictate their actions will likely make a move in 2018. Recent changes to the tax code, combined with still historically low interest rates and back-to-back years of limited inventory, combined with any number of personal circumstances for move-up buyers and downsizers alike, are likely to motivate 2018 buyers.
And interest rates should not be discounted as a motivating factor. The National Association of Realtors has predicted rates on a 30-year fixed mortgage, which had been at approximately 3.9 in December 2017, will likely rise to approximately 4.4 percent by the end of 2018 As mortgage rates continue their incremental upward trend, buyers' interest in finding and purchasing homes will only continue to grow.
While it would be by folly to try to remove all emotion from real estate, this year more than others will be driven by data and inventory numbers. The romance of buying and selling houses needs to make room for the reality of 2018, which will be about transacting home futures, the most personal of all commodities.
About the Author
Greg Hanson is a Realtor with Addison Wolfe Real Estate, located in Bucks County. Greg can be reached via email at firstname.lastname@example.org or by phone at (267)-971-8078