Market Shift Confirmed
Enough time has lapsed that it seems fairly certain the peak of the market was reached in March. Since then, one market indicator after another have been tipping – confirming a rather dramatic market shift is underway. The number of properties for sale is up (more than double since March), pending sales are dropping, closed sales are dropping, and the percentage of homes failing to sell is increasing. It all sounds pretty dire but despite that, we are still in a seller’s market. For the moment.
In the last 10 weeks, Buyers in the above 400K range have seen a steadily increasing supply of homes. Tina Tamboer of the Cromford Report shares this:
“In a nutshell, when sellers have to compete, buyers win. What they win at this stage is their sanity and some normalcy in the home buying process. By normalcy, typical contract requirements such as appraisal and inspection contingencies remain in place. There may be multiple properties available that fit a buyer’s needs, instead of only one with multiple offers already submitted. The median number of days prior to contract is now 11, up 4 days from last month, which provides more breathing room for scheduling showings.”
Sellers are now going to have to manage their expectations – which is difficult after years of holding all the cards. As competing supply continues to rise sharply, sellers should be prepared for more extensive marketing periods, less showings, more flexibility in negotiations, and even correcting unrealistic pricing (i.e. price reductions). At the current rate of change we could be in a balanced market as soon as August. In a balanced market, a third of the properties for sale will not sell with their first agent. Not surprising given that most agents are ill prepared – having never been in a balanced market – much less a buyer’s market. Although sellers still retain a gentle advantage over buyers, only extreme markets hide mistakes. The agent’s ability to counsel, advise, and negotiate are getting very important again. Our best advice? Choose wisely.
The under 400K market is not seeing new listings surge like the other price points. But it is more sensitive to interest rate fluctuations and pricing than higher price points – which is causing demand to drop. So far the impact in that price range has been minimal and it currently remains stronger than the other segments of the market.
Wonder about your specific neighborhood? Contact us for a free supply/demand evaluation. After over 40 years, we have seen every market.
Russell & Wendy