What makes me think the frenzy is slowing down?
1. List prices have gone from ‘exuberant’ to “hit-the-lotto” range, generally speaking. Have you seen it too? It’s not enough to just get more than the last guy, some sellers list so high that they must be thinking of funding the retirements of them and the kids!
2. The days-on-market statistic is dropping, but we are into dizzying warp-speed now – it can’t get much faster.
Here are the DOM for NSDCC detached-home pendings/solds for each month (DOM stops when marked pending, so the DOM is the same whether the listing is marked pending or sold):
Avg Days-On-Market NSDCC Under-$1,000,000
This has to be the peak DOM, doesn’t it?
3. The last big pricing upsurge was in 2003, and even though they were giving mortgages to anyone who could fog a mirror, the intense frenzy only lasted about a year – the pricing leveled off to minor increases starting in 2004. There should be a natural limit on increasing prices – how much can buyers endure?
4. The gap between fraud and flip is getting larger, which should throw logical buyers back to the sidelines. You see it every day – and well, here are two new listings today of similar houses in the same neighborhood with nearly 20% price difference:
Five-second listing – 2,876sf asking $562,600:
Flip – 2,476sf asking $669,900:
At some point, don’t buyers start to hesitate when they see these shenanigans? They should, because it isn’t right – and unfortunately for the legit flipper, it is he who could be harmed.
Just like when the boom started out of nowhere last year (right before the election too!), it is likely that the frenzy will slow….or stop…without notice.
(I’ll add more later)