Are we really in an over-$400k market in Cheverly?

An enthusiastic Cheverly resident (who isn’t moving, by the way, so she doesn’t really have a vested interest in the answer) said that she had heard that houses are selling in Cheverly in the $400s. My quick answer was that Cheverly sales had dipped its toe into the over-$400k market, but found it a bit too chilly.

However, that made me think about backing up my answer with actual facts. So here is the “Over-$400k” funnel.

25 homes listed over $400k since the beginning of 2014.

Of those, 4 haven’t sold yet:
2 are new construction at $535,000 (1 active and 1 under contract)
1 is an older house with an addition at $650,000 (active)
1 is an older house that is nicely updated (under contract).

That leaves 21. Of those:
4 failed to sell and have not come back on the market as of the end of February 2016.

That leaves 17 that actually sold. Of those:
3 came on the market over $400k, but actually sold in the high $300s.

Now we have 14 that actually sold above $400k. Of those:
3 were new construction, built in 2014 and 2015
2 were newer homes, with amenities (2 car garages, etc.) more in alignment with new construction than the older homes.

Now we have 9 older homes. Of those:
1 was significantly larger than any other homes for sale in Cheverly (over 3000 sq ft above grade)

Of the 8 left:
7 were completely renovated (mostly as flipped properties)

And the last one sold in early 2014 and, in my opinion, was a fluke. I still can’t figure out how it sold as high as it did.

For me, this says that to get more than $400k, one of 3 things needs to happen – 1) we need low inventory and lots of actively-looking buyers to help prices go up, but I’m not sure we’ll see that this spring. 2) the house needs to be completely renovated or 3) it needs to be truly unique and special – hard to do in an neighborhood of mostly tract homes.

It looked like we were going to get there toward the end of last Spring and early summer, but the slow-down in the Fall put a definite slow-down on appreciation as well.

Here’s looking at 2016, though!

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Every Picture Tells a Story…

How and why the Cheverly market changed in 20152015 Cheverly market activity

Yellow – the number of houses that were on the market on the last day of each month. It’s a snapshot of the market. More houses on the market – more competition.

Blue is the number of houses that came on the market each month – new listings.

Orange is the number of contracts accepted each month – we call them pending home sales. Pending homes sales are a leading market indicator of how active the buyer market is.

Gray is the number of houses that were taken off the market because they failed to sell.

 

2015 – February through August.  Houses sold almost as soon as they hit the market and often with multiple offers. It’s the usual story of supply vs demand and we had a very short supply of houses during the Spring market.  March and April were wonderful months for sellers, and probably more than a bit frustrating for buyers, since there weren’t enough houses to go around.

Market activity shifted a little over July and August – more houses on the market, but the number of contracts kept up.

2015 – September forward. The month that everything changed.

Imagine you are a seller who has wanted to sell for several years. Throughout the Spring, you see houses selling quickly and with multiple offers. By May and June, you’re thinking this is the right time to sell.  But it takes time to prepare a house to sell, and next thing you know, it’s September. But you figure that if the market was good in the Spring, it will be great now! So you pick a price that is…optimistic.

But a couple of things happened. 1) A lot of other sellers had the same thoughts you did. 21 sellers put their houses on the market in September and October. We had a 67% increase in the number of houses on the market.  2) The buyers went away. The one-two punch of more houses on the market and fewer buyers shopping is why, in October and November, so many sellers took their houses back off the market.

2016 Cheverly market activity

I expect that many of those sellers will try again this Spring and I think three things will happen. We’ll see a lot more houses on the market this Spring than we did last year.  I think interest rates will stay low and buyers will take advantage. So far, the number of buyers coming through open houses is promising. And I think we’ll still see appreciation, but it will be a little more gradual.

You know what we realtors call this kind of market? Normal! We just haven’t seen normal in over 10 years.

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Change in the Cheverly Market?

Of course, I have no idea what will happen tomorrow, much less next month or next year, but I am keeping an eye on a trend that seems to be taking shape. One month does not a trend make, but it will be interesting to watch the market over the winter and into the spring.

Cheverly Active Listings vs Pendings per Month

Cheverly Active Listings vs Pendings per Month

The tall orange column (September 2015) all the way to the right shows 20 active listings (Actives), a number that was fairly consistent throughout the month of September. The blue column is the number of contracts that were accepted (Pendings). In a nutshell, we haven’t had this many houses on the market since July 2011. Coinciding with record high actives, the pending have remained fairly constant. The result is that we have a surplus of homes on the market for the first time in years.

Cheverly New Listings per Month

Cheverly New Listings per Month

Next, look at how many new listings came on the market in Cheverly each month. Again, that last column is September 2015. We had a whopping 15 properties come on the market. The last time we had that many houses come on the market in one month was before the market surged 10 years ago.  On top of that, it is rare to have an increase like that in the fall – most of the peaks have been in spring months.

Analysis

Here is what I think is happening. We have had a shortage of homes on the market since the recovery started. There have been consistently more buyers in competition for those homes. Why the shortage of homes on the market? Many sellers have been upside down since the market crashed, and have been waiting for the market to recover enough for them to break even or make a small profit.

For most of those sellers, they feel this recovery happened this Spring. But most weren’t ready to go on the market. As a few houses sold in the high $300s and even into the $400s, many of those sellers figured that they’d jump on the bandwagon. However, the increase in houses coming on the market has actually changed the market, because the number of buyers hasn’t increased.

Prediction

This is actually a normal market, this surge and fall back pattern. We just haven’t seen one in a very long time. Government shut-down threats don’t help. If you’re willing to price the house where the market is now, rather than projecting a higher price based on the 2015 Spring market, you’ll do fine.

I predict that if the number of actives drops in any significant way, it will be due to sellers deciding to withdraw their homes from the market and wait until later. I think many of the current sellers are going to be disappointed by lackluster activity on their homes (mostly because they priced their houses too high), will take their houses off the market for the winter and will put them back on in the Spring. I also think we’re going to see a surge in new listings in the Spring for the same reason. This may also have the effect of keeping prices more stable.

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Putting Clients First

selling houseOccasionally a buyer will want to buy or a seller will want to sell — and I will suggest that they may want to consider other options. Nothing seems to surprise buyers and sellers more than when I help them find an alternative to buying or selling.

For example, a couple called me some years ago saying that they were close to being behind in their mortgage and that they felt they had to sell in order to get out from under an unbearable debt. I asked would they stay in their home if they could. The answer was a resounding YES. I helped them refinance instead. They had gotten bad advice from other agents and lenders and didn’t think they had any other options. They managed to reduce their monthly payment by a large enough amount that they were able to stay in the house.

I’ve also begged buyers to wait until they were in a better financial position before buying. Sometimes they listen and sometimes they don’t. Okay, usually they don’t. It’s not that I don’t think they can buy, it’s that I think they would be in a stronger position — qualify for better interest rates or lower downpayments — if they wait until their job situation has settled down or they’ve fixed their credit. A plan for increasing savings or for fixing credit can make a world of difference even just a few months later.

It’s not that I don’t want the business, ’cause I really do. The litmus test is this — what advice would I give to my son, daughter or my mother-in-law. If I wouldn’t give a particular recommendation to them, I won’t give it to my clients. Putting commission first is a sure way to burn bridges. If the choice is to move forward with buying or selling, then I’m happy to move forward with them, but at least I know they’ve explored the options.

(C) Susan Pruden.

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Under Contract! 2439 Valley Way Cheverly, MD 20785

Kick Back on the Deck – You Can Almost Smell the BBQ!

Sunny good-sized rooms, a lovely table-space kitchen with updated appliances & countertop. Go from kitchen to back-yard deck for a summer BBQ, or just sit & enjoy the morning breeze. The basement is finished with a very nice full bath & laundry area, plus a 1-car garage. Nicely landscaped. Short walk to Metro. Open Saturday from 1 to 3! Come early & experience Cheverly’s Truck Touch.

MLS #PG8619010

Price: $340,000
Bedrooms: 3
Bathrooms: 2
Square Feet: 1,316

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