The full-blown frenzy we enjoyed in 2013 has been cooling off ever since, and I think we can call today’s market a bit soft. Home buyers are gradually gaining more power and control of the outcomes, and as we saw yesterday in the Inventory Watch, the unsold homes are starting to pile up.
There are signs of a slowdown everywhere – even on the MDLNY. They squeezed some market truth in at the 1:25-minute mark here:
Though they were talking about swanky NYC property, we have seen our higher-end inventory growing constantly too (today there are 512 NSDCC houses for sale listed over $2,000,000, when there were just 430 two months ago).
But now the lower-end is starting to feel it too.
You won’t see it on the official days-on-market metric of sold properties because those are the listings that dodged the bullet. It will be the rising count of active (unsold) listings that reveal the struggle.
How do you know if a listing agent is feeling it too?
Signs That A Listing Agent Might Know the Market Is Soft:
- They’ve Sold A Few Listings in 2018 – Listing agents who are actively engaged know that the market has changed, and that fewer inquiries/offers are the norm.
- Their Listings Are Sharp – Listing agent who are aware of a softer market know they must include excellent professional photos and video in their listings, and the listing remarks make you want to go see the home.
- Showings Available Immediately – The initial urgency of a new listing dissipates faster than ever, and a good listing agent wants to take advantage – they won’t make you wait days or weeks to see a house.
- No Extra Hurdles – We see listings loaded up with extra demands like having to include special forms or procedures just to make an offer. In a soft market, listing agents should make it easy to buy the home.
- Decent Commissions – A softer market is no time to be lowering the buyer’s agent commission – there are too many other homes to show and sell.
- Pushing The Product – To keep the urgency higher, a good listing agent is implementing every possible marketing tactic available. If you see a listing where the agent isn’t making any effort, you know they didn’t get the memo that the market is soft.
Buyers have enough reasons to be concerned about the homebuying experience (higher mortgage rates, rampant fraud and deceit, and significantly higher prices), and they won’t tolerate an ignorant listing agent who doesn’t recognize a shift in market conditions. It is too easy to wait-and-see now.
Get Good Help!
We’ll explore this topic more in the coming days and weeks!
CoreLogic found that approximately 20% of conventional mortgage loans over the past winter were taken out by borrowers with DTI ratios above 45%. That’s nearly three times the percentage of loans made in the eighteen months prior to Fannie Mae’s DTI ratio limit increase, and the largest percentage since the housing crisis.
https://www.benzinga.com/news/18/05/11746156/more-homeowners-are-stretching-their-finance-to-buy
Even though the housing market likely won’t be the cause of the next recession, an economic downturn would still have an impact on real estate.
“Any time there are widespread job losses, particularly if these job losses are protracted, the housing market softens — even if the housing market isn’t the central cause or most prominent casualty of the downturn,” Terrazas said. “The spillover to the housing market will depend on the depth, length and severity of the next recession and, if some parts of the country feel the impact worse than others, some localized regional housing markets could see deeper effects.”
Previously, the panel predicted that any upcoming recession would have a moderate impact on the housing market, with real-estate values in cities such as San Francisco, Miami, Los Angeles, New York, San Diego and Seattle likely to be the most affected.
https://www.marketwatch.com/story/economists-say-homes-could-go-on-sale-in-2020-when-the-next-recession-hits-2018-05-22
The number of sales is the precursor – and prices are the last thing affected:
https://www.ocregister.com/2018/05/19/newport-beach-laguna-beach-costa-mesa-homebuying-12-facts-why-its-cooling/
“The best way to gauge if the sales market is struggling is the increase in calls I receive from developers asking for help,” says Chris Dale, the managing director of Vesta Interior Design. Dale reports that nine months ago he would receive one to two calls a week about home staging; now the calls are daily.