A Summer Market or A Changing Market?
It’s like clockwork. During summer you typically hear conversation about the real estate market being surprisingly slower than springtime. The water cooler conversations and hypothesizing of what’s causing the change tends to fuel the fear mongers. Your neighbor’s home didn’t have twenty offers like the other neighborhood sale just two months prior or the open house didn’t have two hundred people through, so the market must be cooling down. Is the market shifting downward, or is it just summertime?
Historically, summer is known as the best time to sell. Kids are out of school, the weather is great and everyone seems to be in the buying mood. This may still be true in other parts of the country, but locally we experience a very different summer. Our summer includes international traveling, vacations, and re-focusing energy on the family rather than buying or selling homes.
The most motivated buyers may very likely be on holiday from house hunting, so as a seller you settle for the remaining buyer pool, which is still large and motivated. As a seller you may have already planned your selling strategy and sold in the spring, so you have the summer to relocate and settle your family before the new school year. Either way, summer is different from the preceding springtime. The most clear and consistent data point to confirm this change is the amount of new inventory to the market. Year after year we see fewer new listings in summer than in spring. With fewer listings come fewer sales. With fewer sales comes less family moves and less hype about the fast-paced market. When the media talks about slower sales, they are referring to fewer homes being transacted, not necessarily lower purchase prices. This summer phenomenon typically installs fear in the market with a feeling of a slowing market. On the other hand, it can reinforce the fundamental issue of supply and demand. We have more buyers than available homes and the lack of inventory in summer doesn’t help the situation.
But what if we are starting to see the market changing? Buyer motivation tends to dwindle in the summer and it can be felt across the board. When buyers hear about fewer offers on home the natural instinct is to assume the market is cooling and they can be less aggressive. But fewer offers does not necessarily equate to a lower purchase price respective to comparable sales. There are plenty of global indicators to support the argument of change, but how do we know? No one can answer the question if the market is turning, but I am watching it closely to see if the market is in the typical summer mode or if we are seeing the indicators of a changing market. Over the next few months I will be watching the real estate landscape across multiple communities to see any abnormal changes. Stay close and I’ll keep you abreast of what I’m seeing on a daily basis.