Kids are back in school, Rosh Hashana and Yom Kippur are over, the weather’s been perfect for weeks. This should traditionally be one of the busiest times of the year. The past few weeks have been so dead I’m ready to call in the cast from ‘Six Feet Under.’ I’m getting some property inquiries and calls and have had some appointments. But the volume has been turned way down. A lot of inquiries continue to be about lakefront homes, as well as very inexpensive properties (e.g. bungalows for $60,000). Nary a peep for anything non-lakefront in the mid to upper range.
The spring and summer were tough but active. There was an ongoing tug-of-war between buyers and sellers over price and value. Buyers, of course, thought we were in a buyers market and wanted to pay less, sometimes a lot less. Sellers didn’t necessarily share that view. Ultimately a deal could usually be made when there was a motivated buyer and a motivated seller.
There’s been a big change over the last month. One very important ingredient — a motivated buyer — has virtually disappeared. The buyers I have been out with since Labor Day have been more casual lookers getting the lay of the land, not quite ready yet to pull the trigger to buy. Our second home market is primarily a warm-weather use one. During the boom years, inventory was so tight that people would shop and buy in the fall and carry a home over the winter so they’d be sure to have a vacation getaway for the following year. (This was followed by a second mini selling season in mid-winter.) This year, I think second home buying activity will bypass the fall and all push into the mid-winter. In 4 or 5 months we should have a better sense of where the real estate market is moving. Some sense of stability is essential to bring buyers back to the table.
I had a long talk with a real estate agent friend yesterday about prices. She said that a lot of her clients are asking, "Well, should we lower the price?" to get some activity on their property. She doesn’t think that lowering prices will have much impact, if the phone isn’t ringing and there aren’t buyers looking. I don’t know that I necessarily agree. Most buyers start their shopping on the internet, and form their opinions of price and value from listings posted there. Price reductions can certainly help to pull buyers back in. The problem, though, is that most sellers only take baby steps in reducing their price reductions, rather than taking a giant step that causes people to say "What a great deal!"
I think the next few months are going to be very interesting. There’s about a month left in the fall selling season, and I don’t see any appreciable pick-up. The timing is just about perfect for buyers, particularly in the second home market, to make the decision to wait. There isn’t anyone I know who thinks that prices will rise between now and the spring. At best, they’ll remain stable and possibly drop. There’s also little indication that mortgage rates will make a steep climb. So overall there is little risk to buyers to wait it out.