As you all know I've been monitoring a possible slow down in the market. I have confirmed in the last 6 weeks that the market has seen a slowdown in areas specifically without strong school districts. Me and my colleagues have been noticing this and this is no longer a theory it is confirmed. Most likely the interest rate increases shocked already frustrated Buyer's who were being outbid and were already at the peak of their budgets. This also coincided with the summer increase in inventory.
If you are a Seller, this isn't great news, but it is the situation right now. The market shifted very quickly; myself, my clients and my colleagues are all trying to adjust our expectations. Just 6 weeks ago (and the last year and a half), a home would go up on the market, sells way over list price within a week. Now in some areas we are struggling just to bring in a single buyer and even generate agent showings. Buyers seemed to have disappeared! Homes are taking on average 1 and a half months to sell and it's all about Seller's adjusting their price points to the few Buyers that maybe willing to buy, while competing with increased summer inventory. Even when in contract, I see many homes with transactions falling through, either cold feet or appraisal issues. Homes with school districts continue to do well, but they do not necessarily have the same irrational overbidding as in the last year and a half. Seller's you will have to adjust your expectations if you plan on selling your property. Comparable data isn't relevant in a market that is shifting in the other direction. But a home will sell it just depends on the price.
If you are a Buyer in an area without a strong school district, there are opportunities out there for you. I know many of you have been sidelined and the prices aren't going to come down necessarily that fast to meet your budget. Those of you that have had lower downpayments should consider coming back into the market. If a home has been sitting, it is to your advantage as a Buyer as we may not need to go as strong on price and terms if it's been sitting. Check-in with me for specifics on your situation and I will evaluate appropriately.
This market has shifted a lot faster than I expected. I was seeing enough demand for at least this year and I thought into next year. It is unclear if this is short term (Buyers may come back) or long term (this continues to cool down). I have been saying this behavior is not sustainable, but very surprised that it slowed in the middle of this year. The wildcard that caused the shift was Bernake's statements that jolted interest rates upward about 1%. This likely scared off Buyer's and priced them out. Those rates have come down slightly after Bernake re-assured the market that stimulus would continue, however it is not clear that Buyers will come back, they may or may not. Another factor is increased supply of re-sale and new home constructions to meet this demand. Some but not all new home builders have been very aggressive in pushing prices up, that only added to pricing out and frustrating existing Buyers. Again I will continue to monitor and report back.
In highly desirable areas with strong schools or convenience to work, these areas never really slow, but they will eventually shift to a more reasonable bidding level. I see these areas trailing behind for a bit longer.
In short, I know as a Buyer it's been frustrating, I know many of you are sidelined, for those of you that have been and interested in coming back, let's grab time to evaluate your situation.