We recently posted an update on the status of the Madison area condo market. In this post we take a similar view at the latest trends for single family homes. All of our data comes from the South Central Wisconsin MLS, and is updated through March of 2015, unless otherwise noted. Much of the data comes from our sister site, DaneCountyMarket.com. As the data below shows, we're in the throes of a seller's market.
Madison Area Single Family Home Trends - Active Listings
The graph below shows the number of Dane County active single family home listings at the end of every March going back the last 8 years. Active listings have decreased steadily since 2010 and are now more than 36% below the peak. It's important to note that these listings include listings with accepted offers, most of which will end up closing soon. In fact, over 34% of all active listings currently have an accepted offer. When we remove these listings from the March 2015 total, there are only 1,429 active single family home listings in all of Dane County.
Months of Inventory
Another way to look at the supply of single family homes is to look at the months of inventory. The graph below shows the Dane County single family home months of inventory over the last 8 years. As of March 31st, there were only 4.8 months of supply, which once again includes listings with accepted offers. When we remove the accepted offers from consideration the months of inventory are reduced to 3.1.
A market with 6 months of inventory is considered to be balanced, where there is neither an overabundance nor a shortage of supply relative to the demand in the marketplace. This graph shows single family home inventory has been in "shortage" territory for the last 2 years.
Single Family Inventory by Price Range
As the table below shows, months of inventory are especially tight for homes priced under $325,000. When we remove accepted offers from our inventory numbers, the "adjusted months of supply" for every price category under $325,000 is well below 4 months. For some price categories the months of supply are well under 2 months.
Even more interesting, in some price categories as many as 40% or even 50% of all listings already have an accepted offer. For example, 49.7% of all homes in the $200,000 to $224,999 price range already have an accepted offer. For homes priced between $225,000 to $249,999, a whopping 51.2% are already under contract.
The properties in these popular price categories turn over very quickly, which has huge implications for home buyers. If you're a home buyer searching for a $225,000 home on Zillow or Trulia, over 50% of the listings you're looking at are already spoken for. This is one of many reasons why it's important for buyers to be working with a good buyer agent. A buyer agent has the most accurate and timely listing data and can keep your search focused on the properties that are still available for purchase.
Madison Area Single Family Home Sales
Single family home sales continued to climb in March. Sales were up by 11.5% from March of 2014, and up by 10.5% from March of 2013.
Madison Area Pending Home Sales
Pending home sales are up big-time from last year. As of March 31st, there were 47% more accepted offers recorded in the MLS compared to the same day last year. This is a great indicator of market momentum and points to a large number of closings in April and May.
Single Family Days on Market
Our days on market data offers more evidence of a seller's market. As the data below shows, the days on market for sold single family home listings has decreased each of the last 4 years.
Single Family Listing Success Rate
Here is more market data which shows a hot seller's market. The listing success rate for March 2015 was 85%. In other words for every listing that expired in the month of March, there were almost 6 other listings which sold.
A "Plan B" for Home Buyers
With the inventory of single family homes in short supply, many properties are selling in a matter of only a few days, and often for very close to or even above the full list price. This dynamic is spurring more and more people in the marketplace to build over buy. In fact, according to our data at DaneCountyMarket.com, March housing starts (for single family homes and duplexes) reached their highest level out of any March in the last 8 years. New construction is providing some inventory relief for single family home buyers, but not so much for condo buyers. (A buyer can sign a contract to build a new home, but for the most part there aren't any options for building a new condo.)
Putting the Numbers in Perspective
It's a seller's market in many price categories. If you're in the market to buy, we highly recommend you hire a good buyer agent to help you reach your goal of getting into your new home. A good buyer agent will help you focus your search on the properties that are truly available for sale, and even help you locate off-market or unlisted properties.
If you're planning to sell, we recommend you have a professional market analysis completed for your home. Many owners in this market are learning their home is worth far more than they imagined. A good market analysis will shine a bright light on your home's true market value. Soon we'll share some tips on how to obtain an accurate market value for your home. In the meantime, here are 4 tips for selling in this year's hot spring market.
This article is published courtesy of: Dan Miller, REALTOR Mad City Dream Homes & RE/MAX Preferred