Nick at the Wall Street Journal has been doing a great job covering the real estate market lately. He likes to stir it up on Twitter, and yesterday he got a few experts to chime in about pricing in 2014:
There is always a lot of banter and hyperbole, but pricing is somewhat predictable. Sales are the leading indicator – and when sales start lagging, typically prices will follow shortly thereafter.
Here are the quarterly NSDCC sales counts for the last three years. While it looks like there was a big drop-off last quarter, the sales in 4Q13 were actually higher than they were in 4Q11, when rates were comparable and pricing was 32% lower – so no panic yet:
I think we will see the same ingredients in early 2014 that led me to believe we’d have little or no appreciation. What changed was the how I think sellers will react to it.
They will likely tack on the usual 5% to 10% (or more) onto the recent comps, and tell their agent that they aren’t in a hurry, and don’t have to sell. Buyers will hesitate, and the only homes that will be selling are the best-quality buys.
But instead of lowering their price to help cause a sale, the remaining sellers will wait or cancel, chalking it up to the ‘changing market’, and not to their unwillingness to sell for what the market will bear.
So while it might appear that pricing is on the rise, it will be on thin trading. Once it becomes obvious that sales are falling – after being compared to strong counts from the frenzy – then we’ll see if the usual market fundamentals cause prices to follow.
They may not – after all, it is the new normal now. We could see sellers put their home on the market every spring until they get what they want – the ultimate ‘Make Me Move’ market.
I’m expecting more bubbleinfo engagement in the social media this new year. For those so inclined, here are my links:
Bubbleinfo.com on Facebook, the only place that has each bubbleinfo post uploaded automatically:
Bubbleinfo on Twitter, where you’ll find links to additional articles by others, with the first line authored by me as a tee-up. Each new bubbleinfo tweet is posted in the right column here on the blog (and if you access via a mobile device, underneath the posts):
Our Pinterest account, full of housing-related photos and videos:
Have a Great 2014!