Market change?

[Tom4value]

Too early to back up with real data but in Tommy’s old eyes, I am seeing a change in the market regarding inventory and “pricing” (not to be confused with sales prices but will explain later).

Inventory seems to be picking up. I haven’t done entire market analysis yet but when I do an appraisal on a property and pull data it seems like there are a lot more listings. Also, a lot less pendings in relation to on markets, indicating that listings are not immediately being snapped up like they used to. Also, when I do my usual “how are things” banter with the listing broker, they are reporting that they are getting listings now. This is good news for buyers who for the past decade have been frustrated by losing out to other buyers. This may bring back potential buyers who just gave up before.

I am also seeing a difference in the market of outrageous listings. I used to see a property come on at a ridiculous price and think, “no way”, only to be amazed when it would immediately be snatched up and actually sell equal to or higher than the asking price. Not anymore.

I have had the opportunity to talk to the listing brokers of these listings that are doing multiple open houses on the property and seeing two results that are very telling.
1. Open houses get lots of traffic but no offers (or offers way below asking). This indicates that the property for whatever reason, is overpriced and buyers are balking.

2. They get no traffic. This tells me that the property may be fine but the location does not fit the price. Buyers don’t need to see the house. They simply won’t pay that price to live there.

Either way, I have seen a lot more price reductions and/or longer marketing times for the stubborn sellers. Sellers may not like this but as an appraiser, I welcome the change as I think that in the long run, it is better for the market as a whole.

 

[Joe Flacco]

I would like to take a look but the new Redfin datacenter sux. They ruined it.

 

[Joe Flacco]

What you are saying wouldn't be surprising though. New England probably has been one of the most undersupplied markets since the pandemic.

Some markets saw it change in 2023. Some other markets balanced out last year. Some seeing it starting this year.

 

[Terrel L. Shields]

NW Ark on fire, no change for decades with rare hiccup.

 

[John Hassler]

In my little slice of America we are seeing the typical end of a market cycle pattern.

Outlying areas have an abundance of inventory and price drops are common ($300-800k for an average home). Middle areas are “okay” but there is an occasional deal ($600-1,500k for an average home). Top areas are still a tight market with overbids common ($1,400-2,500k for average homes).

This is the same pattern as it was in 1987-1988 and 2006-2007.

 

[Joe Flacco]

I'm seeing the differences in market conditions driven more by property type than by geographic location. Condos have the most supply relative to demand, and detached homes have the least supply relative to demand. Townhomes in the middle.

With geographic location, the city has the most supply relative to demand by a wide margin. DC is at 5.5 months of supply, and the surrounding counties are still around two months of supply.

What I am seeing with condos is troubling tbh.

 

[Joe Flacco]

I played with the Massachusetts MLS for a little bit and it is terrible. Feel bad for you guys.

 

[sputnam]

The most recent data I saw indictated that things are tight in the entry level market. and edging torward a Buyer's market for high end properties. Of course, it's going to vary depending on where your market is.

 

[Tom4value]

I'm seeing the differences in market conditions driven more by property type than by geographic location. Condos have the most supply relative to demand, and detached homes have the least supply relative to demand. Townhomes in the middle.

With geographic location, the city has the most supply relative to demand by a wide margin. DC is at 5.5 months of supply, and the surrounding counties are still around two months of supply.

What I am seeing with condos is troubling tbh.

Oh, absolutely! On the now rare occasions when I do two appraisals in two different markets in one day, I see a remarkable difference.

 

[Gobears81]

I am also seeing the writing on the wall for a potential decline.

Insurance expenses have gone up significantly over the past few years, and we just received a notice that local electric rates will increase by another 25% due to supply constraints.

Five or ten years ago, the assessor's opinion of value averaged maybe 75% - 80% of market values, but that has gone up close to 100% of market values, and it is quite common for property owners to receive assessment notices where their values are doubled or more. RE taxes on a fully assessed property around here can be 20% - 25% of annual rents and are often more than all other operating expenses combined.

Like the OP, I have not seen a lot of evidence in the form of lower sale prices to confirm a decline, although the number of sales has gone down quite a bit. When I do the income approach, the higher expenses more than offset the higher rents and with interest rates remaining high, I don't foresee cap rates going down much in the immediate future.