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Some simple truths about our Gillette, WY real estate market

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Speculation about the state of real estate in our community seems to be running wild lately as our residents are feeling pinched with jobs being lost and the ensuing migration of our workforce trickles on.

For the many people that remain, the questions loom large as to what will happen in the months to come. Considering that the average American’s home represents 67% of their total wealth, what happens in Gillette’s real estate market is on the minds of many. As a real estate brokerage, our biggest hurdle is guiding our clients in this uncertain environment, with the rules that we play by changing quickly. While it is easy to get caught up in the speculation, examining the truths helps us know how to weather this storm.

Let’s look at some of the truths of this market.

There were 428 residences on the market in April

While this number may seem high, we have seen similar levels in years past. Most notably 2010, 2011 & 2013, the number of homes in Gillette hovered around 400 residential listings on the Multiple Listing Service. If you factor in the entire county rather than just Gillette proper, the number is higher. There is much discrepancy on this piece of data as it can vary widely depending on what geographical area you are considering, and whether it includes lots, acreages, and commercial listings.

So, it is hard to gage the market from this number alone. Realtors and industry analysts use factors like Days on Market (DOM), Median Sales Price, Units Sold, Sales Price to List Price Ratio, and Absorption Rate to paint the bigger picture and identify market trends.

Compared to April 2015, here is what the big picture looks like: DOM has been fluctuating up and down over the last year, but on average is creeping down. The number of Residences that have sold took a dive in April, down about 32% over last month, and the Average Sales Price is also on a downward trend to land at $192,261, representing a 20% decrease from April 2015. However, we saw several high-end homes sell in the first three months of this year, which is encouraging. The sales price to original list price ratio is holding steady at about 93%, which tells us homes are going for 93% of their original asking price, and is an indicator of bargaining power.

Lastly, consider the absorption rate, which is a calculation of the number of months it would take to sell the current number of homes on the market (with no additions or withdrawals). We have seen this rate increase about one point per month over the last quarter, to land presently at 8.6 months of supply. A figure above 6.0 indicates Buyer’s market territory, and conversely anything below 6.0 is considered a Seller’s market. With the upward momentum of this figure, it is safe to say we are moving into a buyers’ market.

View this data in this handy Market Infographic   April 2016 Market Outlook Gillette WY

So what do these numbers tell us?

It is simple supply and demand forces at work here, folks. An onslaught of homes on the market is creating an oversupply and consequently a downward pressure on price. We see the biggest expansion in supply in the middle of the market- the $175K to $250K range – and the buyer activity that we have seen indicates that buyers are looking at a lot of homes, and making their move on the ones that they feel are the best deal. The remedy for sellers is to offer price reductions and seller concessions in an effort to attract the elusive buyer. Another market sector we are seeing growth in is the under $200K range, which is being spurred by first-time buyers entering the market, investors nabbing investment properties, and renters converting to homeowners.

What is a Buyers’ Market?

As mentioned above, buyers’ markets are a result of the simple economic principle of supply and demand, and markets such as ours that have a large supply of homes relative to the amount of buyers is indicative of this type of market.

The biggest result of a buyers’ market is an overall lowering of home prices. Sellers who are eager to move on may reduce the asking price many times over the period of months that it takes to find a buyer. Buyers’ markets also encourage real estate investing, with buyers taking advantage of the low home prices and acting on the buy-low, sell-high philosophy, which then relies on expectations that the market will shift to a sellers market at some point in the future.

Buyers’ markets see homes remaining for sale for longer periods of time, which increases a seller’s cost of selling a home and increases the amount of work real estate agents must do to make a sale.

Straight up advice for sellers

While it is true that home values are coming down in the short term, the long term trend of home values has been on a steady upward pace. If you do not have the luxury of waiting to sell, there are a few things you can do to attract buyers and maximize your sales price.

  1. Price your home aggressively. Have your agent show you the homes that are competing with yours, and price yours accordingly. Listen to showing feedback, and have a plan in place for price reductions. Be proactive when it comes to pricing your home, because buyers have lots of choices and will have more than one home they like, and will be writing an offer on the one they think is the best deal.
  2. Have your home in MINT condition. Take care of all the little repairs and details, and as many of the major ones as you can. De-clutter, power clean, and have your home show-ready. There are still buyers out there that are willing to take on a fixer-upper, but it is likely that they will be looking to heavily discount asking price.
  3. Be ready for showings at any time, and try not to turn down any showing appointments. You don’t want to miss out on any potential buyers- it may be a while before another comes around!

Every market has A silver lining

Obviously there is much advantage to be had for buyers in this market, but there is also a silver lining for current homeowners looking to trade up.  Sure, you may have to take less for your current home, but on the flip side, you will pay less for  more square footage, upgrades, acreage, etc. in the home you trade-up to. That nice big home you have been dreaming of could very well be in your reach!

Likewise, this is a fantastic market for first-time buyers or renters looking to purchase. You can buy more house for less money, and your mortgage payments are going to be similar to the monthly cost of renting. An abundance of affordable homes, historically low interest rates, and some really good loan options available make for a perfect storm if you are a buyer.

We are making lots of lemonade here

Our community has recently experienced a lot of lemons. And when life gives you lemons, make lemonade. This housing market is a tough one for sellers, no doubt there, but times couldn’t be better for buyers. And, homeownership still matters as it continues to be synonymous with the American Dream, a higher standard of living, and a gateway to the middle class.

While it is likely that there will be some further market shifts, we continue to be enthusiastic about the future of the real estate market in Campbell County. A long-term perspective and good historical data tell us that this market is likely a blip on an upward growth chart. We are taking a close look at the truths of the market, fighting the fear and speculation with solid data, and have been busy making lots of lemonade.

 

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