Buyers in the Driver’s Seat: Survey Results Pinpoint Housing Market Turnaround

Time on the market, one of the most dramatic changes.
RISMedia
Just two years ago much of the U.S. was in the throes of a raging sellers’ market with many homes selling in 30 days or less, buyers outnumbering sellers by a three-to-one margin, most sellers getting more than 100% of their asking prices, and home prices appreciating annually at a double digit clip.

Today, this frenzy has been replaced with the relative tranquility of a housing market nearly balanced between buyer demand and seller supply for the first time in eight years. The home buyer is back in the driver’s seat and his search for a new or existing home is on cruise control. Buyer incentives, a more relaxed timetable and flat price appreciation is making the hunt less stressful for the consumer.

To discover what happened - and when - one has to only review the last nine “Current Market Conditions” quarterly national surveys conducted by HouseHunt, Inc., a consumer-oriented Internet firm that supplies free information and services to homeowners, home buyers and home sellers through more than 1,500 member agents in 47 states and its primary Web sites, HouseHunt.com and moveUp.com.

Six critical components of the random surveys of HouseHunt member agents hold the key to understanding the national housing market turnaround, which began in the third quarter of 2004 and continues this fall and winter. The e-mail surveys show that the most dramatic changes occurred during the fourth quarter of 2005 and the first quarter of 2006.

To date, the survey results have accurately identified market trends and changes.

“Although random based and not statistically pure, we feel that our surveys of member agents reflect the opinions and actions of home buyers and home sellers at the time they were conducted,” said Michael Bearden, president and CEO of HouseHunt, Inc. “The surveys give us an insight into today’s marketplace, show us where we’ve been, and helps us anticipate future market trends.”

Here‘s what the quarterly surveys showed, by category:

Time on the Market

This is the period of time needed between listing a home and signing a sales contract. In the third period of 2004, three out of four homes were selling in less than 60 days—and 51% of those were selling in less than 30 days. A major change occurred in the first quarter of this year, when only 45% of homes sold in less than 60 days. This ratio widened this fall. Currently, only 26% of homes sell in less than 60 days.

Buyer-Seller Ratio

In the third period of 2004, buyers outnumbered sellers by a 66%-14% margin. The remaining 20% reported a 50-50 ratio. The buyer-seller ratio dropped to 48%-30% in the fourth quarter of 2005, with 22% reporting 50-50. Currently, the trend has reversed to 52%-36% more sellers than buyers. Twelve percent say it’s 50-50.

Inventory of Unsold Homes

This category has been steadily growing since the first quarter of 2005, when 36% of member agents reported a “good supply” of unsold homes as opposed to a “limited supply.” This estimate increased dramatically to 81% in the first quarter of this year and current stands at 89%. This inventory includes both existing and new homes.

Sales Price vs. Asking Price

Another critical measurement of housing supply and demand. In the third quarter of 2004, nine of 10 of sellers said they were getting more than 95% of their asking prices. Many reported more than 100% of asking prices. The margin steadily decreased for the next six quarters, dropping to only 75% in the first quarter of this year. Currently, only 51% of sellers say they are getting 95%-100% of their asking prices.

Multiple Offers

Common in super-heated sellers’ markets, multiple offers tend to drive prices up until demand exceeds supply. Multiple offers have flip-flopped from a 79%-21% ratio in the third quarter of 2004 to only 25% currently. Biggest drop-off occurred in the fourth quarter of 2005 and the first quarter of 2006.

Annual Price Appreciation

Another sure sign of a cooling housing market. In the third quarter of 2004, one-half of member agents responding to the survey reported annual price appreciation of more than 10%. Eleven percent estimated 5%-10% and 38% reported 0-5%. None reported price decreases. A significant change occurred in the first quarter of this year, when only 25% reported increases of more than 10% and 54% reported 0-5%. Currently, only 11% are reporting increases of more than 10% and 33% are reporting price declines.

Despite wide changes in the overall housing market across the country, repeat and first-time buyer activity has virtually stayed in the 60%-40% range for much of the nine quarters surveyed. Currently, repeat buyers hold a 57%-43% edge.