Declining market or still stable

[timindp]

So, I'm thinking about this declining market. Are you guys putting "declining" on page 1 and on the 1004MC ?
I know every market is different. Issue I see now with page 1 on neighborhood characteristics and overall trend on the 1004MC might be conflicting. The 1004MC shows the "overall" trend from the past 12 months, but doesn't page 1 reflect current market conditions? I have had clients tell me that page 1 does not match the 1004MC check boxes.
Because when I do the 1004MC, I am seeing current sales prices being near what they were approx 6-12 months ago, but obviously down from the previous 6 months. Should we just use the data from the previous 6 months rather than the previous 12 months on the 1004MC?

 

[Terrel L. Shields]

The market is clearly in decline when activity falls off a cliff. Whether that translates to lower prices is a separate matter. Of course, the MC form is based on the premise of price rules all. But my decision on whether the market price is declining or not is to plot sales over the previous year on Excel, then run a trendline and see if it is increasing, flat, or declining. In my market, for the most part, it is very slightly declining, but again, the total sales volumes are down and I call it a declining market.

 

[Alsie35]

So, I'm thinking about this declining market. Are you guys putting "declining" on page 1 and on the 1004MC ?
I know every market is different. Issue I see now with page 1 on neighborhood characteristics and overall trend on the 1004MC might be conflicting. The 1004MC shows the "overall" trend from the past 12 months, but doesn't page 1 reflect current market conditions? I have had clients tell me that page 1 does not match the 1004MC check boxes.
Because when I do the 1004MC, I am seeing current sales prices being near what they were approx 6-12 months ago, but obviously down from the previous 6 months. Should we just use the data from the previous 6 months rather than the previous 12 months on the 1004MC?

That sounds like it might be a description of the typical market cycle (dip in the winter-time). They key questions are "how far down has it come"? And "does the trend continue in the Spring"? That might give you a clue. I am seeing the same thing thing in most market areas here in So. TX. Market has overall slowed greatly but median values are still strong, down maybe 5% in some areas, some areas pretty stable the past 6 months, and some newer areas are still clearly stable for the past 12 months with no decline in median prices. I keep crunching the data. Again, the Spring will tell the tale whether there is a true downward correction in progress or whether we've basically hit a plateau after a small dip.

Some massively overpriced areas can probably expect a more significant correction than will be seen in areas that are more affordable and are still attracting buyers from other states.

 

[Terrel L. Shields]

can probably expect a more significant correction than will be seen in areas that are more affordable

The median price here is falling suggesting that demand for more expensive homes has waned. But I think the last 2 years has seen way too much buying that makes no sense - the FOMO problem. Fear of Missing Out... missing out on what I ask?

 

[shrubberyvaluation]

The market is clearly in decline when activity falls off a cliff. Whether that translates to lower prices is a separate matter. Of course, the MC form is based on the premise of price rules all. But my decision on whether the market price is declining or not is to plot sales over the previous year on Excel, then run a trendline and see if it is increasing, flat, or declining. In my market, for the most part, it is very slightly declining, but again, the total sales volumes are down and I call it a declining market.

A reduction in activity does not necessarily mean a decline. It depends if it is coming from a supply or demand side. A reduction in supply could be an increasing market, yes it would influence people to build more and increase the supply but there can be a lag time.

 

[Terrel L. Shields]

A reduction in activity does not necessarily mean a decline.

In total dollars in circulation, it almost certainly does. Sellers draw back because sales have slowed and they may wait until spring but the question remains - will the buyers return to the market then.

 

[Charles West]

It usually takes about 250 or so days for FED increases to be fully felt by main street so mid 'to late 23 should be the bottom of the market equities wise. Layoffs are increasing so unemployment will start to be a factor. Rates are dropping this morning as inflation subsides amid signs of a weakening economy.

 

[George Hatch]

What's happening in a neighborhood might not be happening in the subject's market segment. Let the data speak.

 

[Dublin ohio]

In my neighborhood. Prices during the past 3 months are up over the previous 3 months and yoy. Current listing prices and under contract are higher. But total volume is down and current listings and under contracts have longer dom.

 

[Alsie35]

The median price here is falling suggesting that demand for more expensive homes has waned. But I think the last 2 years has seen way too much buying that makes no sense - the FOMO problem. Fear of Missing Out... missing out on what I ask?

For many people the circumstances of the past 2-3 years created a favorable opportunity and incentive for a distant move. (The outlook for a big move is nowhere near as rosy now, given the economic downturn and rise in % rates).

People moved for a variety of personal and career reasons. The pandemic situation accelerated that trend big time and compressed a decade trend into several years. That drove prices up due to limited supply. Once you have decided to move cross-states, you do what you have to do.

Do some of them regret it? Maybe, but most are living in better circumstances as a result.