Real Estate Market

July 2015

Existing Home Sales Report

Driven partially by an increase in the percentage of sales to first-time buyers, existing-home sales grew in May to their highest pace in about a half dozen years, according to the National Association of Realtors®. Nationally, the Northeast region saw the largest sales increases but all major regions experienced sales increases in May.

Total existing-home sales, which tracks completed transactions for single-family homes, townhomes, condominiums, and co-ops, increased 5.1 percent to a seasonally adjusted annual rate of 5.35 million in May from an upwardly revised 5.09 million in April. Sales have now grown year-over-year for eight consecutive months and are 9.2 percent higher than a year ago (4.90 million).


Existing Home Sales By Region

NAR's chief economist, Lawrence Yun, said that home sales in May rebounded nicely following the decline witnessed in April and sales are now at the strongest pace since November 2009 (5.44 million). According to Yun, "Solid sales gains were seen throughout the country in May as more homeowners listed their home for sale and therefore provided greater choices for buyers." Yun also added that, "overall supply still remains tight, homes are selling fast and price growth in many markets continues to teeter at or near double-digit appreciation. Without solid gains in new home construction, prices will likely stay elevated — even with higher mortgage rates above 4 percent."

Other Takeaways

  • Total housing inventory at the end of May grew 3.2 percent to 2.29 million existing homes available for purchase; this is 1.8 percent more than a year ago (2.25 million). Unsold inventory now sits at a 5.1-month supply at the current sales pace which is down from 5.2 months in April.
  • The median existing-home price (all housing types) in May was $228,700, which is 7.9 percent higher than May 2014. This is the 39th consecutive month of year-over-year price gains.
  • The share of the market represented by first-time buyers rose to 32 percent in May, up from 30 percent in April and matching the biggest share since September 2012. One year ago in 2014, first-time buyers represented 27 percent of all buyers.

The Price is Right...Or is it?

If you are planning to put your home on the market -- especially if you live in a place where prices are rising and buyers are competing for homes -- it can be tempting to list your property at a high price hoping that you'll actually get it. After all, it can work with cars, why not with homes?

Don’t do it. Resales of homes and automobiles are very different things.

Experienced Realtors who have been through dozens, scores, or even hundreds of transactions, will advise you to price your home appropriately from the outset because it's pivotal to seeing the home sold quickly and at the best price. Research backs up what experienced Realtors already know: overpricing your home and then lowering the price a few times most often leads to a final sales price significantly below what you originally should have asked for it.

And, to make matters worse, the longer a home remains on the market, the deeper the discount is likely to be off the original price. Ouch!

How to price your home correctly

Many homeowners seek to price their home based on factors like the price they paid for it, the balance that they currently owe, or simply on the profit they need to buy another house or to meet their financial goals. These motivations are perfectly understandable but in reality the value of your home is what the market will bear. Here's the problem: If a property is overpriced, some potential buyers will avoid looking at it at all (and having no one show up to see it is a pretty clear message from the market). Others may view the home but walk away without making an offer.

So, what can you do? Choose a Realtor who can provide you with the best comparative market analysis (CMA) and who understands your local area intimately. Some agents may attempt to woo you with an inflated price -- it probably happens every day somewhere -- but in the end the market will speak clearly, and choosing an experienced Realtor who understands the importance of market-driven pricing will end up being a choice you won't regret.

Your Realtor's CMA should include sales prices for similar properties nearby that have sold recently, prices for currently listed homes (these will be your competition), and prices of homes that were taken off the market because they didn’t sell. Look for a Realtor with demonstrated experience who can factor in a range of local market issues to produce that all-important first price.

If the price is right from the beginning, it usually means not only a faster sale, it typically means more money in your pocket.

Investing in Real Estate

Today's low interest rates and stabilized home prices have created some great investment opportunities!  Investing in real estate has unique advantages over other types of investments:

  • Interest in mortgage loans are tax-deductible.  Investors can lower their tax liability while increasing their equity.
  • Renters pay down your mortgage loan.  Investors reap the benefits of rental income, which offsets your mortgage cost and build equity.
  • Real Estate values increase over the long term.  Real Estate is limited and will always be in demand. 
  • 1031 exchanges are available to defer taxable income when you are ready to sell.

Many investors are taking advantage of these great market conditions. Have questions? Give us a call. We are happy to help!

Contact Information

Photo of All Stars Realty Real Estate
All Stars Realty
The Driver Team
2857 Shelby St.
Bartlett TN 38134
Office: (901) 387-1199
Cell: (901) 674-7653
Fax: 901-432-5445