In the past two weeks there appears to have been a major shift in the market. I’ve been reporting on the micro-market shifts and vulnerabilities in the economy throughout the COVID crisis. During escalating values and multiple offer dynamics, I definitely started to feel like the kid in “The Emperor’s New Clothes.” 🤓
- Related article – Foreclosure tragedy of 2022
However, mainstream media sources who previously denied any risk of foreclosures or market vulnerabilities are now reporting heavily on “bubble” effects, market crashes, etc.
Buyers are concerned about market conditions, sellers are confused and you’ll find mixed opinions with realtors. It’s a complicated market dynamic. One that can’t be simplified into a sound bite. Clearly we are seeing a more balanced market, with indications of a shift toward buyers.
It’s changing but it’s not 2008
Market dynamics today are indeed very different from the mortgage crisis. There are contra indicating statistics, even within one location. For instance, when you review the Monthly Market Reports for our major market areas in Philadelphia and on the Main Line, there are strange mixes of data which can be interpreted in many different ways.
Across the nation and in Canada there’s a clear general trend toward a softer market with increased days on market, price reductions and fewer buyers making offers. In the information below, you’ll see local trends as well as direct data on major metropolitan areas throughout North America in the luxury segment. Clearly a significant slow down in some of the hottest areas during the COVID driven market spikes.
Changes are multi-dimensional. We won’t know the full story of how this market shift compares to 2008 until we can look at it historically. A word of caution – just because it’s different, doesn’t mean it’s not significant.
Buyer Offer Challenges
Making offers this week has felt like we are balancing on an old fashioned teeter totter. Or maybe snowboarding a crumbling snow bank would be a more current analogy. Most sellers and many listing agents are still in a mindset that reflects the market as it was two weeks ago, or two months ago – not today. We have to balance making an offer that is aggressive enough to be attractive without putting my buyers at risk of overpaying in a shifting market.
How do you know how to price your home correctly in a shifting market?
In this video report are key elements for home owners to consider when pricing in a shifting market;
- First, what is the market? Macro to Micro
- Pricing “In the Market” and
- What’s “Out of the Market”
What buyers are paying NOW for similar homes determines values, not what was negotiated two weeks ago, two months ago or last year.
To yield the highest net in any market, it’s important to price ahead of current trends so that you don’t find yourself chasing the market down.
For more insights and market details, check out the information below.
More Than 40% of Home Sellers Are Dropping Their Prices in Salt Lake City, Boise, Sacramento and Other Pandemic Hot Spots
Sellers are adjusting their expectations as they realize many buyers are no longer able to afford the type of home they could have before mortgage rates shot up, as reported by Redfin. …The share of homes with a price drop increased from a year earlier in 102 of the 108 metros in this analysis…..Redfin News
Luxury Property Inventory Levels Increase – What is the Significance?
May saw a comparatively significant upward shift in the number of homes listed for sale, especially compared to the same period in 2021. This was not unexpected, as there has been a gradual increase of new listings and a slower escalation of price increases over the last few months.North American Luxury Review
According to our analysis of North America’s top 140 luxury markets, the new listings entering the market in May 2022 increased by 61.3%, resulting in the single-family home inventory level rising by 27.5% compared to May 2021.
In the attached property market, the numbers were less dramatic but still significant, with 37.3% of new listings entering the market, increasing the inventory level by 1.5% in May 2022 compared to 2021.
Overall, the median price for properties in the Top 10% of the market rose approximately 16% year over year. Although this is still a substantial percentage increase, it is smaller than May 2021, which reported a 24% increase over May 2020.
Despite the rising inventory levels, the market remains extraordinarily strong; the sold price to list price percentage rose by 1% in May 2022, above an already unprecedented 100% ratio in May 2021, and days on market for sold properties fell by 30%.
Of the 140 markets researched, 129 remain seller’s markets – not surprisingly, the markets that are either balanced or become buyers’ markets are seasonal markets, such as ski resorts and winter sunshine destinations, whose main buying season has finished.
For a .pdf version of the June Luxury Market Report, please contact me.
If you’ve been considering selling, now is the time to take action! Let’s go over what options are best for you and create a plan for your success. Schedule a confidential consultation directly on my calendar.