Market Update

 Here is the latest market update...

As a reminder, 100 is a completely balanced market.  1 buyer for every 1 listing.  5-6 months ago, 600-700 was common.  This has been the fastest drop-off we have ever seen (including 08').  

Historically, August is the month with the least options for buyers.  January is the most.  How this progresses into the holidays will be very interesting.  Should the trend continue, we will be in a heavy buyers market by the 1st of the year.  As with our ascension, the decline could be just as fast.  

However, one major pressure will keep a decline slower than our rise.  1) Appraisals.  When a bank comes in, they will look backward 6 months to determine value.  As this happens, they will pull in previous higher numbers and keep declining prices at a reasonable, albeit uncomfortable, decline.  

However, a few things could remove this protection...distressed sellers.

The market will always have a certain number of sellers that are distressed...death, divorce, job loss, job transfer, inheritance etc. can all cause sellers to make unprecedented price reductions.  When this occurs, a snowball is formed as the sales price becomes the new "comp" in the neighborhood.

Last month we saw a price decline of about 3% in value.  This is likely to continue but slow.  I'm predicting a "value" decline over the next 12 months to be 20-25%.

Major factors that will push this one way or the other would be interest rates and buyers such as Opendoor and Offerpad.

After 12 months is too far out for me to comfortably predict.  A substantial number of factors will come into play unrelated to predictable statistical reactions.

If you are a seller, you need to accept these uncomfortable realities.  With a market decline of 2-3% a month, your "normal" price reductions may not cut it.  You are simply keeping up with the trend.  You will need to be uncomfortable in your reductions to truly realize a market reaction and solicit an offer.  2-3% is the "normal" right now.  5%+ a month may be the only way to solicit interest from a nervous and empowered buyer.

At $800k this might mean $40-50k...on $500k 25-30k a month...until sold.  Obviously, this is motivation dependent.  If it's a situation where you'd "like to" move then being more aggressive may be fine depending on your condition/upgrades/comps etc.  If you are highly motivated, "need" to sell, or distressed...higher reductions should be taken sooner rather than later.

Right now, we have 18,000+ homes for sale, 6 months ago it was in the 5,000's.  If the last 10 years of history continue in January, we will have 23-25k.  You do not want to have 3-5 months on market time going into this scenario.