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What’s happening in our market right now, and what can we expect from the market in 2018?
First, let’s start off with the number of homes that are currently available in our area. Currently, we have less than 1.5 months of supply in terms of both condos and single-family homes. This means we’re in a seller’s market at the moment (brief explanation: a balanced market is about 6 months of available homes at the rate of sale using the average of the past 12 months. In a “balanced” market supply and demand are similar and neither buyer nor seller are advantaged).
Note: We will likely see a drop even further in available homes in Dane county in early January as December usually experiences the largest number of expiring property listings and sellers think that it’s best to wait until early summer “when all the sales are occurring”… see below for the truth on when the most buyers and sellers strike an agreement (or accepted offer). Also it’s worth mentioning that in most years December 31st has the largest number of properties listings that expire.
Since it’s the holiday season, some sellers take their homes off the market and there is normally a decrease in demand. All the holiday festivities and end-of-year deadlines tend to leave little time to get your home ready to show or for looking for a new home… not to mention the lack of warmth outside. The bright side: buyers that are out touring homes during the holidays are typically very serious about their home search.
The fact still remains that in December there are typically fewer accepted offers than any other month. In most cases we recommend that sellers allow showings if possible.
Nevertheless, the market is expected to continue favoring sellers into 2018.
The number of accepted offers ramps up over the next few months, with April typically seeing the most. March and May are also great months for this. Once an offer is accepted it usually takes around 45 days or so to get through the inspections and financing and to the closing table… June normally has the most closings of any month in a typical year. The main reason? Many sellers and buyers wait to close their sale until the conclusion of the school year.
Let’s move on to interest rates. Today, local lenders are reporting their interest rates are at 3.875% for a 30-year fixed mortgage. Experts do say, though, to expect a 4.5% rate by the end of 2018.
Overall, the 2018 market should be similar to what we saw this past year. In short, we expect to see too few houses for too many buyers. With demand high and supply low we may very well see additional upward pressure on pricing for homes in Madison, WI and Dane county. If (when) interest rates increase, they will remain near historic lows which has advantages for both buyers and sellers. Especially if that seller is now buying and financing a portion of their new home.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.