Market Erosion
The trickling erosion of the market continues although the rate of erosion appears to now be slowing. While supply is up, in fact up a whopping 57% from this time last year, it is still below normal. Demand is more problematic and continues to be anemic at best. It seems likely to stay that way unless a drop in interest rates changes buyers’ appetites. So although we are overall in a balanced market – for most sellers it doesn’t feel that way. In fact, areas and price points are behaving differently. In the center of the valley, supply is more constrained as builders have no land to create new product and thereby more competition. It is the outer areas where builders are active that sellers are at a marked disadvantage. Price, a trailing indicator, is being affected currently in part due to the luxury market going flat in summer and in part by seller needed price reductions. As the Cromford Report shares “seasonal patterns are being emphasized by the weakness in demand”. So the real two-word problem is – anemic demand.
The Report further summarizes:
We are firmly into the quiet season and closed sales for June 2024 were already down 15% compared to June 2023. We anticipate low volumes to continue during July and we have 2 to 3 months of seasonal price weakness to endure before the market is likely to pick up steam again in October. This could be jump-started early by a drop in interest rates, but we are not holding our breath. There is no need for panic, but patience is definitely being tested.
Buyers should take advantage of the lull as they have a chance to negotiate in their favor with more choices to consider. Sellers need to brace for less showings and offers and try to hang on to the buyers they attract. Patience seems to be the byword.
Wonder what your specific neighborhood is doing as far as supply/demand and pricing? Contact us we are always here to give you facts, not headlines.
Russell & Wendy Shaw
(Mostly Wendy)