Generally speaking, anyone in business or in sales is looking for bigger numbers. But sometimes big numbers can register a “false positive”. Sometimes what you are looking for are smaller numbers. It is in these areas we will look at and see why sometimes less is much, much better when dealing in real estate.
But first, let’s take a year over year comparison of the month of May along the Crystal Coast. It proved to be a very productive month in many ways.
This past May the Crystal Coast had a total of 379 condominiums on the market for sale. 46 of those condos were new to the market place. A total of 31 condos got sold. The average sold price was $234K. The median sold price was $229K. The supply of inventory was at 12 months. (More on the supply of inventory later).
8 percent of the available condos were sold while 12 percent of the market place was replenished with new inventory for sale.
Taking a look at single dwelling residential properties (homes), the Crystal Coast offered 1,150 units to choose from in May, down 16 percent compared to the May of 2015. Of the 1,150 homes listed for sale, 99 of them got sold. The month of May saw 162 new listing come on market. 9 percent of the available homes were sold during the Month of May while the market was replenished with 14 percent more.
The average sold price of a home was $335K which is up by 9 percent over May 2015. The median sold price was $265K.
It is important to note the difference between average and median prices and to point out why the great disparity between the two. The average sold price is the sum of all sold prices divided by the total number of homes sold. The median sold price is when you compile all sold prices from least to most expensive, the median is the price that is exactly in the middle of the list.
(For more information about the difference between average and median sold prices, Real Market Reports has a great article called, “Median Vs Average Values in Real Estate”)
This is also important to highlight particularly along the Crystal Coast because we have such a diverse market place. We range from sub $100K inland homes to multi-million dollar waterfront and beachfront homes. The fact of the matter is that most home sales occur in the $300K and under range with the lion’s share of that at $250K and under. For example this past May, 49 percent of all homes sold were under $250K. But because of the handful of more expensive homes being sold, the over-all average sold price is up at $335K.
The method of payment for real estate purchases shifted during May. This could be a sign of things to come.
52 percent of all real estate purchases were through a conventional loan. 18 percent were cash deals, 17 percent were through the Veteran’s Administration (VA) and 3 percent via the Federal Housing Authority (FHA). The remainder came through various forms such as seller financing.
This is what is significant about the above. Conventional loans have been hovering around in the 30 percentile range. Cash transactions have been in the 20’s. For several years after the real estate “bust” cash transactions were as high as the 30-40 percent range.
We here at Hitchcock Realty have been reporting a lot lately about the easing of mortgage loan requirements and the near historic low mortgage rates. Evidently folks are taking advantage of the opportunity.
The lower number of cash transactions could also be an indication that there are fewer foreclosed and distressed properties on the market. Generally speaking distress sales, short sales and foreclosures require more time and paper work than do a traditional sale. It also usually means that the buyer has to be cash ready on the spot to even qualify as a buyer.
When lending requirements ease more people will get a mortgage. A lower interest rate isn’t necessarily the motivating factor. During the great real estate “boon times”, mortgages were easy to get but rates were double (and more) than what they are now. Cash transactions hovered around the 5-7 percent range back then.
Now, to talk about why sometimes in real estate bigger numbers don’t necessarily mean a better real estate market. For example, ever since Hitchcock Realty was created back in 2005 we have been talking about the primary thing to look at is the supply of inventory or sometimes referred to as the absorption rate. This is a number you want to keep low.
The supply of inventory is a method in which we measure the rate of sales. It asks how long it will take to sell all of the available inventory if no new inventory comes on market for sale. Ideally that time span is about 6 months. This is why it used to pretty much be standard to have a listing agreement for that length of time. Right now the Crystal Coast is looking at a supply of inventory at twice that rate (12 months). This is actually good news for there was a time when we had almost a 3 year supply of inventory!
When the Crystal Coast had approximately 800-900 homes for sale during any given month then that’s when we had a supply of inventory in the 4-7 month range. It’s been over a decade since we’ve been at that level. Seeing that number down to 1,150 homes is pretty exciting because it has been double that in the not so far past. To show the improvement in just one year, May of 2015 had 1,368 homes for sale. We’ve been able to pare down the glut of inventory by 16 percent all the while maintaining near identical sales numbers, 99 homes this year compared to 98 last May.
It is a simple matter of supply and demand. For over a decade the Crystal Coast has had an over-supply (a glut) of inventory. There were many factors contributing to this. Some had to deal with pricing and the inability of some to adjust to current conditions. Other factors had to do with the shake-up within the mortgage lending industry as well as the appraisal industry.
The moral of the story for the Crystal Coast real estate market place is that conditions are good and getting better for both the seller and the buyer. Access to mortgages has been made easier, rates are tremendous, and pricing is conducive for sales as well as the reduction of the over-all inventory.
For more information about homes, condos or any type of real estate along the Crystal Coast of North Carolina then contact Margaret Hitchcock with Hitchcock Realty. Margaret is a Realtor with many years of successful real estate experience. Morehead City, Beaufort, Atlantic Beach, Emerald Isle, Newport, New Bern and the Neuse River area-It doesn’t matter where, if it’s along the Crystal Coast or in the New Bern area, then Margaret can assist you today. Call her at (252) 269-2893.