Talk to almost anybody in the real estate business here — Realtors, attorneys, appraisers, title companies, home inspectors, surveyors and lenders — and you’ll hear the same refrain. They’re busier than they can recall, bordering on fried. There’s a pretty simple reason. The volume of home sales here in Sullivan is WAY up compared to last year. For the 3 month period ending July 31, the number of closed sales was up 27% from the same period a year earlier, and the rate of increase has been accelerating. I’ve run some preliminary numbers for August, and the 3 month increase will likely jump above 30% when the month closes out. Don’t be surprised if there’s a quarterly reading between now and the end of the year with a 40% increase (although more likely we’ll hover in the +30% range.)
If you’re a regular visitor to my site, you know I’m a data geek. I’ve been playing “guess the number” with colleagues in the business the last few weeks. People generally respond that they think we’re running 10-15% ahead of last year, and when I say the number is closer to 30%, they’re shocked. Then a light bulb goes off, “That explains it.” The National Association of Realtors reports that sales for the northeast region for July were up 10.3% over the previous year. Sullivan’s pace right now is almost triple that!
Modest increases can be absorbed by ‘the system’. There’s enough extra capacity among attorneys, inspectors, surveyors and appraisers to keep things moving through the pipeline pretty smoothly. But a volume increase of 30% or more is a different matter. The system is stressed and the pipeline is backlogged. There isn’t the capability to quickly add capacity, particularly for the ‘boots on the ground’ parts of the process. Appraisers have to know a local market, so lenders can’t just shift people from Albany or Westchester. Likewise, surveying is a very local business, and there are only so many surveyors in this area. Same thing for home inspectors.
The result of all this is that closings are taking longer. The time from deal to closing with a mortgage in ‘normal’ times was 50-60 days. I’m telling clients now to think 60-75. There isn’t one single choke point causing the delay, but rather a few days at each step that add up to an extra couple of weeks. The best home inspectors are booked out 7 to 10 days. It’s 2 to 3 weeks right now to get a survey. Appraisal appointments are running 5 to 7 days out, rather than a typical 3 to 5.
What does this mean for buyers? Buyers (and sellers) need to adjust their expectations for ‘time to close’, If you’re using a mortgage, get the longest rate lock you can (60 days), and don’t lock your rate until you have an executed contract (to start the clock.) Lenders may say they can close in 30 days, but it ain’t happenin’. For your home inspection, you may need to take off a day from work to come up on a weekday rather than scheduling on a weekend. If a good home inspector has an opening, grab it. Expect higher prices for some services.
If you’re just starting out or more casually looking (i.e. you’re not planning to buy until and are looking to get the lay of the land), you may want to hold off for a month or two. For a lot of Realtors here, long leisurely ‘survey’ trips are harder to work in right now, particularly on weekends. Don’t be put off if an agent says they can’t really start working with a new client for a few weeks. That’s actually a sign of a good agent who’s committed to their current clients and knows their capacity limits. Anyone can say ‘yes’, but if they can’t follow through, you’re just going to be disgruntled.