It’s generally accepted that 6 months of inventory is a neutral market for buyers and sellers. Less than 6 months of inventory indicates a sellers’ market. As you can see by the Cromford Report September supply chart below, homes priced roughly $300K to $400K are at the 6 month level, and drops sharply for lower price ranges.
This is consistent with what I’m seeing for my buyer clients, particularly in the under $200K price range. It’s virtually impossible to encounter a home under $100,000 without multiple offers. Of course, bank sales are a major factor, however, even well priced “traditional” homes move quickly in these price ranges.
One of the big reasons homes over $400,000 are slow to sell is due to loan restrictions. Many buyers will be unable to utilize a low down payment FHA loan due to the maximum loan limit of about $346,000. Conventional loans cap out at $417,000. Above this amount, the buyers typically need a substantial down payment with significantly higher interest rates. However, as pointed out by Dan Green, it is possible to find loans for homes in the jumbo to super-jumbo loan price ranges that are a bit more buyer friendly by checking out “niche lenders”.
If you are in the market for homes in the jumbo price ranges then consider Dan’s suggestions to find a loan that will work for you. However, be sure to evaluate the neighborhood sold comparables and pricing trends to understand if the price you are considering is well positioned.
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