Friday, November 25, 2022

Happy Thanksgiving and Black Friday!

Well I do hope you all had a warm and pleasant Thanksgiving Day yesterday and I hope you score some killer deals Today on Black Friday! So this is a real estate site, any Black Friday deals on real estate? Not exactly.

Despite the perception, the Holidays can be a good time to buy and sell. I mention this every year and I'll do it again this year. There is a significant number of people that put off real estate decisions until after the Holidays. Sellers will suspend their listings or postpone until January and buyers will also wait until after and so in general December is a slow month for real estate.

However I've noticed that seller activity slows down quite a bit more than buyer activity in general. Sellers that suspend or postpone listing until after the Holidays are not in a hurry to sell. Sellers that remain tend to be ready to go or perhaps need to move quickly for a job change or something similar. Buyers can capitalize on the urgency of sellers that market during the hectic season and sellers can capitalize on serious buyers that are not just 'kicking tires' but are ready to purchase.

We all have plenty of things to do during December so we tend not to be looky-looing around in this month. The bottom line is that both buyers and sellers that continue their real estate activity during the Holidays tend to be very serious about getting into contract and that bodes well for all involved. For both buyers and sellers there is less competition and that can be a very good thing.

Have a great weekend, see you next week.

Friday, November 11, 2022

Market Sliding Gently into Oncoming Recession

The real estate market is sliding gently back into more neutral conditions. But is it really neutral? There are several ways to create balance and imbalance in the market. Balanced conditions happen when supply and demand are both about equal. You can have short supply with little demand, medium supply with medium demand, or high supply with high demand. In any of these conditions the market is neutral. A strong sellers market can happen when supply is short and demand is high, but it can also happen when demand is low if supply is extremely short. Our recent market transitioned from high demand and ultra low supply to medium demand and ultra low supply, to low demand with ultra low supply where we sit now. Yes demand has fallen off due largely to the increasing cost of money. But the number of listings remains fairly low as well so prices are softening, but only a little bit.   

If our market sees a sudden burst in listing activity we could see a harder crash, but for now, trends are showing a soft landing. Soft is good. Sellers worried about the declining market should consider that it can be an effective way to save a little money. If prices are falling the selling will lock in the price of the current house when they accept a buyers offer. The next house they buy will be a little cheaper as the market softens further. There can be an upside to slipping prices.

Mortgage rates right now remain in the 7s but most rates come at a cost in points. Par rates and rebate rates are not in the mix right now. Buyers will need to be ready to cough up some closing costs to get a loan and sellers should be ready for offers with buyers asking for help. This is the market we will have to deal with for the foreseeable future. It is totally manageable when you hire the right agent.


Friday, November 4, 2022

Chasing the Market Down

OK sellers,  there is a such a thing as chasing the market down. What does that mean? Well in a market where prices are falling, whether they are plummeting or just sliding gently down you absolutely cannot expect good results by overpricing your home or even pricing it based on recent comps. Because a typical home sale takes 30 days to complete so a house in your neighborhood that closed yesterday for $400,000 was actually negotiated 30 days ago or more. 

When you price at or above the current market and you factor in the increased marketing time of a stable market you will be overpriced by the time your buyer arrives. Buyers are not likely to make an offer on an overpriced home unless they absolutely love it. Meanwhile as the marketing time increases new competitive properties come on the market at even lower prices. So eventually you have to lower your price. If you lower it again to what the "current" comps suggest you fall into the same cycle and literally chase the market down until it starts to recover. In the end of this scenario sellers will lose thousands or perhaps tens or thousands of dollar. I have seen it before and I am seeing it now.

In a market will declining values a seller need to get ahead of the curve and that means pricing the home a little under the comps suggestion. Now the house looks competitive in the market place even 3-4 weeks into the listing cycle. It is better to sell it now than let the market fall further. This can be a hard pill to swallow, especially in the immediate aftermath of one of the hottest markets we have seen in decades. That market is over. Buy as of now the sky is not falling, homes are still selling and price reductions and valuation adjustments are still sliding south on a gentle trajectory. There is no guarantee that glide won't convert to a precipitous fall but it just as easily could be a minor bottom and return to growth depending on economic activity in the region and nationally over the next several months.

Don't chase the market down, you will lose way more money with six months of price reduction than just selling it quickly at a sharp looking price today.