The real estate market seems to be picking back up, after a summer seasons that sputtered along in fits and starts. Many sellers had been holding to unrealistic price expectations based on price appreciation rates of the past few years. And many buyers had been, well, just holding, fearing a sharp downturn. Throw in high gas prices and rising mortage rates, and it added up to a real estate market in need of a double dose of ExLax.
There’s been a definite change in the last month, with a sharp rise in deals in the mid market range (from $250K to $400K). When I’ve been calling listing agents to make arrangements to show properties, I’ve been hearing over and over that there’s a deal on this property or that property. Of the 5 most recent deals I’ve worked on putting together, there have been other bidders on 3 of them. The multiple bidding hasn’t been as aggressive as last year, but the fact that there have been other bidders on some of these properties has come as a surprise, given all the media coverage of real estate doom and gloom.
Where I’m seeing the action is in the mid-market. Earlier in the summer, most buyers I saw were looking in the mid to budget range, around $200,000 to $250,000, with very little interest above $300,000. Recently I’ve seen interest return to the mid market between $300K and $400K, and that’s been where all of my most recent deals have been.
I think there are 2 factors. One is that sellers have read the writing on the wall, and reset their price expectations to much more realistic levels. I’ve seen a lot of new listings come on the market at very realistic prices, and some of those have sold very quickly. Other sellers have made significant price reductions and found a buyer. In a parallel move, a lot of buyers have raised their price expectations somewhat — and together, buys and sellers are finding a new market range.
Don’t jump to the conclusion, though, that the market is moving again because prices have collapsed and bargain hungry buyers are swooping in to snap up fire sale bargains. It appears that the median sales price will be holding right around $190,000 when September sales are closed out in about a week, and in looking at forward sales in contract, we’ll probably be trading around that level for the next few months.
While the mid market seems to be finding a new equilibrium, the upper end of our market (which starts at about $500,000) continues to feel very soft. I’me just not seeing a lot of buyers looking for trophy property right now. Contributing to the slowness in that market segment has been the reluctance of upper end sellers to adjust to the changing market.
On the inventory side, the inventory increases we’ve seen since the winter have started to reverse. So far in September, inventory has pulled back slightly from 1,260 houses to 1,243 houses on the market. Asking prices also continue to retreat, down to an average of about $292,000 (from a peak of $303,000 earlier in the year.)