Frenzy or Glut…Or Frut?

Written by Jim the Realtor

October 7, 2020

The 2021 market is shaping up to be a humdinger!

Will ultra-low rates and more inventory cause it to be the Frenzy of All-Time?  Or will a surge of home sellers – namely the baby-boomers – bring about a flood of homes for sale that swamp the market?

Frenzy, or Glut?

Or as the market transitions from one to the other, shall we call the combo a Frut?

We know pricing will be higher than it is today.  It is inevitable that the 2021 sellers will add a little mustard to the comps; after all, this is their opportunity to hit the jackpot.

It will look like a frenzy, right up to the point where buyers back off because they see a few too many homes not selling.  It won’t happen in February or March because it will be too early. But by April and May the unsold listings could start stacking up, and what looked like a frenzy could turn into a glut in a matter of a few days.

If sellers don’t flood the market in April and May, we should experience a full-blown frenzy straight through to summer….as long as pricing seems reasonable to buyers. But some areas, and maybe only a few, won’t have enough demand to soak up the April/May supply.

Buyers AND sellers will struggle to identify which is which.

Here’s a way to know.

It will be different for every neighborhood, but let’s say in a neighborhood of 100 homes, the current average length of ownership is 12 years. It means the number of sales should average around 8 homes per year, with them bunched up around the spring selling season.  Let’s say 4-6 of those sales would happen between March and June.

You can also calculate how many homes sold in your neighborhood this year, and compare.

In either case, if you saw new listings hitting the market in early spring that would double the number of sales in either of the two measurements above, then you’ll know that something unusual is happening.

The demand has overwhelmed the supply this year, at least in the NSDCC Under-$2,000,000 category.  We should survive, and probably thrive with additional supply.  So it would take about double the number of homes for sale to make it obvious, and cause concern.

Buyers are known to stop on a dime, so the impact will likely be immediate.

For a precursor, track the number of new listings hitting the market, and whether they go pending in the critical first 7-10 days they are for sale.

3 Comments

  1. Jim the Realtor

    June will be a little soggy no matter what happens in Feb-May.

    Between having real graduation ceremonies and people busting out to real vacations, June will be slower.

  2. Curious

    Should one sell before the end of this year or wait until January or February to list a $1,100,000 home.? Assume that the seller plans to rent for 1-2 years in the same area.

  3. Jim the Realtor

    Should one sell before the end of this year or wait until January or February to list a $1,100,000 home?

    My first rule about when to sell? Sell when everyone else isn’t.

    I’m guessing that the market conditions will be the same between Nov 4 and Feb 1, with an inventory/market uptick beginning after that.

    So either go on the market in the next couple of weeks when we know the inventory is razor thin, or wait until February.

    If you’re a gambler, then wait until March/April and hope market momentum was building before you list. It could get glutty quick if sellers go nuts on price.

Jim Klinge

Klinge Realty Group
Broker-Associate, Compass
Jim Klinge

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