Supply And Demand Now Favoring The Seller
June 1, 2013 by Johnny Brooks
Every product’s value is based strictly on the supply and demand theory. If demand outweighs supply, the value improves. The reverse also applies, a higher supply than demand would command, will normally decrease the value of that product. This concept has never been more prevalent than explaining today’s real estate. The similarities between real estate and other less expensive merchandise are striking. Even if demand outweighs supply, the price of that home or product has to be inline with what a consumer will pay.
The main factor for rising home prices this year are the strong demand for the few homes on the market. Using Davis, California as an example, here are the numbers that tell the story.The average sales price has increased by about 7% this year. The total number of sold properties have increased by more than 10%. Here’s a breakdown for the first five months this year and how it compares to last years stats.
2013 total sales-198 2012 total sales- 174
Avg.Sales price- $481,307 Avg.Sales price- $448,352
Price per sq ft- $275 Price per sq ft- $251
Days on market 47 Days on market 70
Like most markets throughout California that has seen home prices increase in many cases by double digits, the lack of inventory has been the main justification for the uptick in home prices and the change of the housing market that now favors the seller. There are many more buyers than available homes for sale. Even with the escalation in mortgage rates that would normally decrease the number of buyers and slow the market, this has had little negative impact on the buying frenzy.
Why the lack of inventory is the burning question that many buyers are asking? With the rise in home prices this year, many sellers expect prices to surge higher. Many are holding off marketing their home now in hopes values are up in the future. You also still have those owners that can’t sell their home now because of the loss of equity that has happened over the last several years. Patience on the part of sellers could reap huge financial rewards heading forward. Please visit my website www.JohnnyBrooksHomes.com
for helpful tips on buying or selling a home, scan my informative blogs and easy access to view local area homes for sale in Davis, California and the surrounding communities.