“How’s the market?” That’s everyone’s first question to a real estate professional. Today’s answer is this: “It depends on whom you are talking to”.
If you are the seller of a high-end home, value over $750,000, you’ll say the market is soft. There’s excess inventory and weak demand.
If you are selling an average or average-plus home, say up to $500,000, you’ll have a strong initial market response and sometimes more than one offer the first week of the listing. You’ll say the market is strong.
So call this market segmented. Yes, there are overall numbers that help characterize the broad market. But the devil is in the details.
Overall, for instance, there was a 7.38% decrease in residential sales during the first six months of this year, compared with last year’s first half. By mid-year we saw a return of inventory to the “normal” levels of 5-10 years ago (over 1000 homes for sale). Sales prices have held somewhat steady.
But consider the various market segments and a more nuanced story emerges. There is downward price pressure on upper-end homes. We have close to 11 months of inventory from $750,000 up to a million and 2 ½ years’ supply over the million dollar mark! Under $500,000 still reflects something of a shortage, with less than 4 ½ months’ inventory for homes under $500K. In between these extremes, the $500,000-$750,000 range is in balance.
So if you are leaving town and have to sell a high-end home you bought just a few years ago, you are going to take a loss. Your home isn’t worth what you paid for it. For many of you, thankfully, your employee benefit package may include a measure of loss protection.
Today’s market is what it is: you sell for today’s market value and don’t look back.
However, if you are just looking to downsize and don’t want to sell at today’s price, you might decide to wait and see how the market recovers. Many of you have owned your homes for a long time, however, so perhaps your equity is large enough that you will shrug and say “so I don’t get to sell at the market peak, but at least I can do what I want”. The issue for you may be finding a suitable replacement property from the limited supply and competitive environment. If your home sells before you’ve chosen a new home, you may need to make temporary housing arrangements to accommodate your buyer’s closing date.
Now here’s a much more happy story. Suppose you are looking to upgrade your living style. The cause could be anything: birth, marriage, job change. Maybe there’s two incomes in the household, and both of you are in stable segments of the current economy. With such enonomic and personal confidence you are in position to enjoy the benefits of this “Tale of Two Markets”. Your current home is in the high-demand segment of the market and you’ve enjoyed the benefit of modest appreciation in past years and a strong selling market today. The supply of homes you want to move to is reasonable in size and appealingly priced.
So let’s call it an Upgrader’s Market, and see how many households decide to go this route.