For a lot of homebuyers, specifically those in the Northwest, we think of houses as long standing objects that have stood the test of time and are often found to house some amazing stories. A loose railing here or a chip in the bathroom sink there have character and stories that often go overlooked but not unappreciated. If our houses could talk what magnificent stories they would tell. But, out in the housing market there exists more than just houses with grandiose stories to tell. Out in the housing market there exists a growing segment of the market slowly being taken over by houses with no story to tell…yet. For the last several years, home sellers had to compete with large number of distressed homes (foreclosures and short sales). The good news is that the supply of these properties is plummeting like a rock in the vast majority of housing markets. Many homeowners are now thinking of selling as the impact of this substantially discounted competition has all but fallen off the face of the earth. And why not sell at a time like this? When your biggest competition has left the market you stand to gain from their absence as there are still plenty of buyers out there looking for a home.
But, much like the world around us, when one thing leaves a system it is often replaced by another that is comparable or better. Every seller of an existing residential property must realize that there is a new form of competition hitting the market. If you have paid close enough attention to the market you would see that newly constructed homes are flooding the markets across the country. According to the National Association of Home Builders (NAHB), new-home sales topped 500k in August, for the first time since 2008. “This jump in sales activity is in line with our latest surveys, which indicate builders are seeing increased traffic and more serious buyers in the market for single-family homes,”said Kevin Kelly, chairman of the NAHB. When we break this all down regionally we can see that new home sales rose:
- 50% in the West
- 29.2% in the Northeast
- 7.8% in the South
- And remained unchanged in the Midwest
This means that interest in newly constructed homes is on the rise and this portion of the market will be the biggest threat to existing home sales. There is no need to panic for those of us looking to buy a home. The introduction of new-homes into the market will actually slow the climb of property values and even lessen it in some markets. But, if you are someone thinking about selling, perhaps you should do it now to avoid additional competition coming to the market. If you thought it was hard selling your house with a plethora of foreclosures on the market then just imagine how hard it is going to be to sell your house against competition that is more sought after and less expensive than your home. Your home may have stories to share so let those stories be heard now.