“For Merrimack Valley residents looking to sell their homes, there’s no time like the present,” says Kiera Blessing, reporter for the Eagle-Tribune.
And she’s absolutely right.
How do I know? I contributed to her article. I was quoted in the March 26 Eagle-Tribune piece, after a phone interview with Kiera a few days prior.
I love working with local press for interviews and articles like this one.
What you need to know from the article
You should definitely read the whole article. It paints a very clear picture of the spring housing market in and around North Andover.
Table of Contents
- Too few homes
- Spring season
- New kind of buyer
- Escalation clause
- Reaching the limit
- Market data
- Breaking the record
- By the numbers
But I’ve also pulled out the parts that come from my interview and also from the data and stats pulled directly from this website.
Frenzied buyers are competing for too few homes
“If it’s priced correctly and a good house in a good location, it’s going to go in less than a week, no doubt,” said Ryan Schruender, broker owner of Real Living Schruender Real Estate in North Andover. “It’s crazy how there’s no inventory out there.”
Right now, there are 71 properties for sale in North Andover, with another 25 likely to hit the market soon.
For the middle of April with the weather finally improving, that might as well be zero.
By comparison, 115 properties sold in North Andover from Oct 15 – Dec 31, 2016, according to Realtor.com.
In some of the worst months of the year for real estate sales, we had 61% more inventory than we do right now.
Spring is real estate season
Spring is historically a good time for the real estate market, according to Schruender, because the weather improves, drawing people outside, school is about to be let out, and summer is a convenient time for many folks to move.
Anybody who’s ever seen an Open House sign can tell you this one. Especially on Sundays. And every agent knows it all too well, too.
For example, there are 8 open houses happening this weekend — just above 10% of the for-sale properties — and at least one or two more are guaranteed to be open to visitors too.
We know that April is historically the busiest month for home sales in our town, but this April looks unlike most that we’ve seen in a while.
It’s not a bad thing!
Low inventory doesn’t mean a bad market—just the opposite. It means that NOW IS THE TIME TO SELL! You’ll get some very motivated buyers knocking down your door!
A new kind of buyer
“The buyers are very educated nowadays, so they know what’s going on, so they see that now is a great time to buy and we just need more sellers to understand if they price the property correctly and put the house on the market now, it would be … a great time to sell,” Schruender said.
He added that buyers are aware interest rates are creeping up, and hope to lock down a home before they rise much higher.
Buyers are doing their homework on real estate research and planning much more—and more thoroughly—than they ever have before.
With so much information available online, it’s no wonder people are educating themselves before signing an agent.
And that’s a good thing!
Educated buyers are better for everyone. They don’t waste time or money making mistakes or viewing properties they won’t want or can’t afford.
And now, they’re grabbing up almost every house on the marketing and driving demand through the roof.
Want proof? Buyers add “we can beat that” to their offers.
To get a leg up on their competition, some buyers are including escalation clauses in their offers, Schruender said. An escalation clause is a sort of addendum to their offer that says if someone outbids them on a house, they will automatically increase their offer to, say, $1,000 more, up to a certain price.
This is a pretty big deal, and it’s an unmistakeable sign that sellers have all the leverage right now.
If you make an offer on a home, but you REALLY don’t want the sellers to bail on you if someone else comes along, you might add one of these to your offer.
It’s called an Escalation Clause, and it’s a big deal.
Essentially, it says: “if anyone beats my offer, I’ll automatically beat THEIR offer by $___. That’s how badly I want to win.”
It turns the price into a bidding war instantly. And that bidding war only benefits one party: the sellers.
All good things must end.
But the seller’s market does have a price cap, according to Schruender — about $850,000.
“The sweet spot is anything under $600,000 is just flying off the market,” he said. “$600,000 to $750,000 is still pretty good … and anything $850,000 (and up) is generally sitting for a longer period of time.”
Sellers under 600 can expect to see multiple offers almost instantly—in some cases same-day. And then the real fun begins.
But what about the higher end of the market?
Well, as the value and sale price creep up, the demand starts to taper off—classic economics, really. Fewer qualified buyers at higher price points means less competition and the buyers start to gain back some of the bargaining power.
The data! This one is my favorite.
According to data Schruender provided specific to North Andover, the average absorption rate for homes listed in the $700,000 range is about 2.7 months. When the price crosses into the $800,000 range, the rate rises to about 4.5 months. It stays below six months until the price crosses over to $1.5 million, at which point the absorption rate jumps to more than nine months.
This isn’t a quotation, per se. But it’s a citation. It cites info we collected and published specific to the North Andover housing market.
And it’s awesome, if I do say so myself. Check it out right here:
The numbers Kiera cited in the excerpt above come from the Market Absorption Rate section, almost at the the bottom of the (very long) post.
And credit where credit is due. The data for this graph came from MaPropertiesOnline.com, a data-driven real estate group out of Lexington.
One thing to note is that these data are from October 2016.
The updated version for March 2017 looks even more promising.
And as a reminder, please keep in mind that these data are actually for Andover, not North Andover. We were unable to dig up a graph like this one for North Andover data, so we’re using the closest comparison/nearby town that we could get.
2017 will set the record.
Schruender added that skyrocketing rent prices are driving more first-time home buyers to consider a mortgage.
“The last three years have been good spring markets, and I would say this one’s shaping up to be the best so far,” he said.
A lot of people hear “inventory is at historic lows” and think it’s all doom and gloom.
Far from it.
Yes, we want to see more sellers get on the market—more inventory is good when demand is this high. But even without more inventory coming on, buyers are ready to go.
Rent is high. Interest is low. That’s the perfect time to buy. And a lot of buyers know it.
Sure, it’ll be a little tough to be a first-time home buyer right now, since there’s so much competition out there. But still—the buyers keep coming.
(BONUS: know a first-time buyer looking to break into North Andover? Show them this list of houses under $400,000 in North Andover. It’s the perfect way to break into a hot market. And there are more good options than you might think.)
But the opposite is true for downsizers and any other category of would-be seller: NOW. IS. THE. TIME.
Seriously. Don’t wait to list. The buyers are ON FIRE right now. Call me. Let’s talk.
Merrimack Valley in midst of Seller’s Market
Here are the numbers taken from Kiera & the Eagle-Tribune’s graphic: Merrimack Valley Real Estate by the Numbers, for all of 2016.
- -36.7% Single family
- -27.6% Condos
- -34.3% Combined
- -6.8% Single family
- +25.2% Condos
- -12.8% Single family
- +21.7% Condos
Days on Market
- -42.1% Single family (58 days/101 days)
- -41.3% Condos (51 days/86 days)
- -41% Single family (1.4 months)
- -35.4% Condos (1.3 months)
Median Sales Price
- +17.9% Single family ($395,000)
- -2.1% Condos ($206,075)
Thinking of selling? Let’s go!
The time has never been better. Call me and let’s get you sold! Get in touch.