Why More Sellers Could Test the Market

By Nick Timiraos

The number of homes listed for sale in April increased by about 8% from the same month last year, a sign that rising prices may be inducing more Americans to put their homes up for sale, according to a report from real-estate brokerage ZipRealty, which measured listings in 24 major metro areas.
The number of listings outpaced the level of homes that went under contract in April, according to the ZipRealty figures. “It’s less of an indication of buyer momentum flagging and more of seller momentum picking up, finally,” said Lanny Baker, the company’s chief executive.
The report found that homes sold in April had been on the market for 32 days, compared to 48 days last April. Mr. Baker said that while rising prices could certainly be fueling more sellers to test the market, other metrics could be an equally powerful motivator: namely, the prospect that homes are spending less time on the market.
“A market in which the sale prices are happening very close to the list prices, a market in which the list prices seem to be moving sequentially higher, and a market in which any of those houses are selling speedily is one that is bringing sellers back,” he said. “That makes it feel to a seller that this isn’t going to be a long passive despair that I tried three years ago.”

More In Housing Inventory

In other words, the fact that the process will run more smoothly could also be driving more sellers to list. “One of the ‘costs’ for a seller testing the market is that it’s pretty darn disruptive,” said Mr. Baker. “Once you put your house on the market, you have to clean it up, you have people traipsing through—it helps if that’s a 24-day process instead of a 120-day process.”
Prices have continued to climb as more buyers chase fewer homes. There were nearly one-third fewer homes for sale in many markets in April versus one year earlier, including San Francisco, Las Vegas, Los Angeles, San Diego, and Orange County, Calif. But the report showed that inventories were down by just 5% from one year earlier in Phoenix, which was one of the first markets to turn around.
Homes in the San Francisco Bay Area are selling for 3.6% than their listing price, on average, while homes in Los Angeles, San Diego, Las Vegas, and Sacramento, Calif., sold at their list price. The weakest of the 24 markets included Long Island, where homes sold for 95.3% of their list price, and Chicago, at 96.7%.

A separate report from Redfin, a real-estate brokerage, suggests that buyer traffic may have slowed slightly in May. Redfin found that the number of customers taking tours of homes fell by 3% in May from April, compared to a 2.2% decline last year. The number of customers making offers fell by 2.1%, more than last year’s 1.1% drop.

Mr. Baker said that he’s more worried about consumer sentiment towards housing rather than the fundamentals. “The thing that worries me the most is that a natural maturation of this off-the-bottom-surge toward lower-but-arguably-more-sustainable-growth gets misread as some scary ‘weakening’ and shakes the confidence of the market,” he said.

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Saturday, June 15, 2013