Real Estate Pivots
If we were tracking the real estate market like we track the stock market, we would look for new highs and new lows, then we would look for points where a breakout stands out or where support breaks down. Recently I noticed a certain trend that appeared in one of the Long Island markets.
As you can see in this chart, the average price for a home in this particular Long Island market in August, just a month-and-a-half ago, was $847,000. Considering that the average transaction takes between 45 and 60 days, those transactions that culminated in August probably began in June or early July.
Now, in September we are seeing a new trend appear. The average sale price for this Long Island community fell precipitously to $679,000, nearly a 20% drop in just 30 days. As you can see the average price in August was almost 11% higher than it was in 2020. Whereas in September the year-to-year comparison showed less than 1% appreciation in the number for the average sale price of a home.
I asked a New Jersey broker if she had seen anything similar in her markets. I trusted her knowledge as she has been in the business over a decade. She agreed that what I was seeing in Long Island was happening in New Jersey.
I asked a New Jersey broker if she had seen anything similar in her markets. I trusted her knowledge as she has been in the business over a decade. She agreed that what I was seeing in Long Island was happening in New Jersey.
There are fewer buyers and more homes coming onto the market, which are selling for at least 10 to 20% less than they would have just a few months ago.
Affordability
What does this all mean? Probably means that the frothy markets that we have been accustomed to seeing over the last 15 months will no longer be like the ones in the fourth quarter of 2021 and 2022. In addition, inflation is beginning to take its bite out of the buyers’ ability to purchase homes. Inventory is increasing and the number of buyers out there looking has also decreased, making it less and less of a seller’s market.So if you are a seller right now there are definitely different criteria for the way that you price your home. Here are four suggestions that sellers need to consider when speaking to those people looking to list soon:
Number One: Staging is more important than ever. Demand for homes is beginning to back up to the days that we had seen in 2019, where homes might appreciate 5-6% a year, not 10 or 20%.
Number Two: Digital marketing is more important than ever. It is super important now to price your home correctly. Bidding wars, which had been commonplace for the last 15 months, are no longer holding true within this new market dynamic. Make sure your digital presentation is spot on.
What does this all mean? Probably means that the frothy markets that we have been accustomed to seeing over the last 15 months will no longer be like the ones in the fourth quarter of 2021 and 2022. In addition, inflation is beginning to take its bite out of the buyers’ ability to purchase homes. Inventory is increasing and the number of buyers out there looking has also decreased, making it less and less of a seller’s market.So if you are a seller right now there are definitely different criteria for the way that you price your home. Here are four suggestions that sellers need to consider when speaking to those people looking to list soon:
Number One: Staging is more important than ever. Demand for homes is beginning to back up to the days that we had seen in 2019, where homes might appreciate 5-6% a year, not 10 or 20%.
Number Two: Digital marketing is more important than ever. It is super important now to price your home correctly. Bidding wars, which had been commonplace for the last 15 months, are no longer holding true within this new market dynamic. Make sure your digital presentation is spot on.
Number Three: Suggest that if you are looking to sell your home, research the brokers in your neighborhood to find out those who have the best reviews and rankings. Then consider interviewing them to see what kind of chemistry you have between them. The sale of the home begins first with the relationship with the selling agent and the seller.
Number 4: Make sure your title company is top-notch. In a disruptive market, especially one where the number of transactions is going down, you can’t afford to have glitches in the transaction.