Read the blog below:
Anthony Lamacchia – July 2018
Anthony: Hey, everybody, time for a market update. Have you noticed all the negative housing news in the last couple of weeks? It’s actually been amazing to see. Yes, the market has slowed down a bit. I talked about it all through May and all through June how we were headed for that, but now, you got to love the news. They always love to grab big headlines, attention-grabbing headlines I should say.
Here’s one in Bloomberg, “The housing market looks like it’s headed for the worst slowdown in years.” Here’s another one in Yahoo, “The housing market is slowing down and that’s a bad sign for the economy.” Wall Street Journal beginning of last week, “Home sales extend slump despite economic strength.”
Let me talk to you about what’s really going on here. It happens every single year and on like unbroken record every single year. Inventory is low in the winter and as you get closer to summer inventory rises. When it’s low in the winter, buyers compete for homes. Homes sell for over asking and all through the spring everyone goes, “Oh, my God. My house is worth so much. My house is worth so much.” Then everybody starts telling their realtors and some realtors go along with it, “My neighbor’s house sold for 800, I want to sell for 900.”
They all start overpricing a bit. By the time you get to summer, there’s a few less buyers because those buyers have found homes, there are more homes on the market, and all of a sudden, homes that are getting listed, which by the way in June is when a ton of homes got listed, homes are starting to get listed too high. The prices are too high. People push their luck.What automatically happens? Market slows down. Homes aren’t going under agreement as quickly.
That’s what I want to talk about because I don’t want people to get, to see that kind of news and think that the market’s crashing. They should see that kind of news and understand that, yes, the market has slowed down a bit. This is very, very good news for buyers but I’m sorry, buyers, we are still in a seller’s market. We put a blog out back in the beginning of May that said, “Don’t worry buyers this won’t last forever.” We meant it, and now, here we are and it’s a lot easier for buyers.
I’d say the strength of sellers is still probably here and buyers are here but buyers have strengthened up a lot. The strength of sellers have come down a little bit. It happens all because of inventory. Homes listed for sale in the first six months of this year was actually up compared to the first six months of last year.
However, if you take June out, it was almost neck and neck. If you look at the first three months of this year, it was down. Homes listed for sale in the first three months of this year was down a lot, then we got to late March after all those crazy storms, homes listed went up, and then homes pending started to go up after that. That’s why we’ve had a bit of a late start to the year. I just want people to understand that this is how the market works. This is totally normal, and because of the late start, now we’re going to have a busier summer than normal.
What does this mean if you’re a seller? If you are a seller you need to be realistic. I use the 800, 900 example before. If your neighbor’s home went under contract back in February and sold two weeks ago, actually closed three or four weeks ago for 800,000, and your home is just like that one, you probably won’t be able to sell for the same amount of money. Why? More homes are for sale now a few less buyers. You have to recognize that but you, also, should remember that if you’re buying and selling at the same time, it comes out in the wash. It’s no big deal. You’ll sell for a little less. You’ll buy for a little bit less.
If you’re a buyer what does this mean? It’s very good news for you as a buyer. You have more choices. You have a little bit more negotiating power but don’t get crazy. What we see, and this happens every year around this time, is what I call the wrestling match between buyers and sellers. Buyers smell blood in the water and it’s always amazing how fast they smell it. They smell it within a week of inventory going up so they back off. They start seeing– A week ago they were willing to offer 600 on a house that was listed at 550. Now, the house is listed at 550 they want it at 450. They get crazy and then they end up losing homes.
Basically, my message to both buyers and sellers is don’t get crazy. Be logical. Understand how the market works. Buying a home and selling a home is not a cage match. You’re not fighting the buyer. You’re not fighting the seller. You just need to be reasonable, see how many other liked homes are like it on the market, and decide what you think a good offer is, and be reasonable about it.
Don’t go too low and then you end up not getting the home, someone else does, or what we’ve seen also in the last few weeks and it happens every time inventory goes up, is we see buyers backing out of transactions. They make an offer on a home. They go tell their whole family, “I made an offer,” and then, guess what? The family says, “You paid that much? Did you see the article in The Wall Street Journal? The market’s crashing.” Buyer gets cold feet, buyer does the home inspection, finds out that, what? There’s not grounded outlets or the boiler needs to be serviced. Bang! They back out of the transaction. That is getting crazy. We’re not faced with that situation.
Let me tell you when we are faced with a crashing market, I will be the first one to tell you and I will bluntly tell you but we’re not there. This is a typical seasonality change that we’re seeing here. We’ve started over the last three years and we’ve been in the same pattern. If buyers and sellers remain reasonable and don’t get greedy, you can still sell a home for a very good price. You can still buy a home for a good price. There’s no doubt that we’re in a good market or in a strong market.
In my opinion, we have at least two years to go in this type of market which for buyers can be a little frustrating because that winter and spring timeframe to buy is not easy. The best time of year to buy is coming up. I say it every single year. From August until about Thanksgiving is the best time to buy. Not the best time to sell but the best time to buy.
Please keep all of that in mind. That is the truth. I’m telling you like it is. Take that into account. Don’t get crazy and the best of luck to you whether you’re buying or selling. Have a great week everyone.