I feel like I’ve kept my thoughts fairly compact this month while observing the market carefully.
I can’t say I’m fully convinced we’re moving in a direction yet.
So I’ll keep the predictions to a minimum…
My takeaways today are:
- Buyers are actively looking
- Buyers are bidding, just at lower prices
- Sellers are starting to take our advice on pricing levels
- Properties lingering on the market are approaching (or are at) levels where buyers are taking interest, or will get “lapped” by new property coming on at actual market-savvy prices
- We are in a zone where buyers are feeling there is value out there
The 3rd quarter numbers will come out in a week or so, and they could finally corroborate what I and others have been talking about for at least two years.
The market is soft and has remained “squishy,” a word that I feel captures the situation pretty well: Sellers are getting squeezed a bit.
Of course, what may happen is that as sellers price their properties more accurately to market, the Days on Market statistic may actually go down, as compared to a time when properties had been sitting far longer (2017) on the market.
Pulling out New Development sales from the market, the resale market looks healthy and liquid.
Deals are happening at lower levels.
Buyers who try to time the “bottom” of the market may miss out.
We seem to be at a point where buyers should feel empowered to move ahead on a purchase, knowing that they are seeing excellent value.
Whether they only decide to act once we’re past a bottom, only time will tell.
And if history is any guide whatsoever, everyone will decide at nearly the same time that the housing market is in recovery- and the pendulum will swing quickly in the other direction.
Inventory has dwindled quite a bit, even adjusting for normal seasonality; that is, we’re not seeing a flood of property right now in the Fall Season.
It will be interesting to see if we need to get all the way to April 2019 to know the full effects of the new tax regime.
What I mean is this: Buyers may not fully feel the impacts of non-deductible State and Local Income Taxes (well, only up to a $10,000 level which includes Real Estate Taxes) until they file in April.
This may impact buyers’ willingness to “pull the trigger” on a purchase.
My sense is that (1) as mortgage rates creep up a bit, and (2) everyone gets used to the new reality of what it costs to live in Manhattan, and (3) those who decided to flee to lower-tax states have already fled… we’ll be left with (A) buyers who want to be in Manhattan, (B) buyers who aren’t getting enough value in the suburbs to entice them to leave, and (C) perhaps some wage inflation which will help buyers’ purchasing power, and….perhaps a housing market in recovery.
All of this is but one scenario going forward.
Regardless of how accurate that proves to be, right now it does seem that buyers and sellers are coming together with a little more regularity than what I’ve seen in the last 18 months.
So, we shall see! -Scott