It’s all about perspective when looking at the real estate market.
“Contradictions do not exist. Whenever you think that you are facing a contradiction, check your premises. You will find that one of them is wrong.” (Ayn Rand, Atlas Shrugged).
”The market is hot.”
“The market is slow.”
“Inventory is depleted,”
Single-Family home sales drop, prices rise”.
“I sold a house in three days.”
“My house has been on the market forever.”
There has been a great deal of contradictory information out there on what is happening in the real estate market. I know you want the straight scoop from me.
And a conclusion. But my Mom never said things would be easy. Here goes.
“There are no broad brush descriptions of this real estate market that can withstand anecdotal evidence to the contrary. We are not “a market”. We are a house, a buyer, a seller, a price point, or a neighborhood, and there is as much diversity in real estate as there is in people and the places and homes they want to buy.
Brad O’Conner, Chief economist for Florida Realtors attributed the decline in sales and rise in prices in part to an ongoing shortage of distressed properties in the most affordable price ranges. ( Full article here ) True. But there are deals; there are affordable homes; and while there are fewer distressed homes for sale, there are opportunities. So what gives?
Price elasticity. I learned in Economics 101 the definition of price elasticity. Price and demand are related. As price goes up, demand decreases. Or should. As demand goes up, price goes up. Or should. In the real estate sales business, however, the sellers are setting their ask price (hopefully with the help of their broker). But they are not selling a commodity like, say corn. Every single house or condo is unique (as to location at the very least). There is a great deal of “noise” or distraction in the price. What does it include? What are the holding costs (Utilities, insurance, taxes)? How is it decorated, located, and presented? IT takes time to weed thought all this “noise” so the while there may be price elasticity in the real estate market, it is slow to react and the reactions are hyperlocal.
Hyper Local versus “The Market”. Any article written about “The Market” can be contradicted by hyper local news. After all its about perspective. Even interest rates rising nationally don’t effect an area in which all cash buyers are buying. It is true that in general bad economic news slows down real estate sales, as does a nasty presidential race or planes flying into buildings. To really know what is going on, you still have to look at what YOU are doing and define it as “micro” as you can.
I met with an agent in Marco Island this week. We shared “How’s business” comments. He shared that the call center that sets up appointments for homes that he works with was a mere ten percent of the volume that they were one year ago. And this was a trend, not an anomaly. He told me that the Marco Island real estate market was absolutely dead. From Brad’s data below its true that Naples/Marco MSA is down double digits. But I can guarantee to you that there is a hot pocket of business in a hyper local area in Marco.
Here is my conclusion, for what it is worth. The real estate times we are in are varied, not easy to trend, and favor reasonably priced homes, smartly presented homes, and with homes with responsive buyers and sellers that set their objectives and goals realistically. We are not seeing great appreciation OR rapid depreciation. Some sellers a still think that they can price lead the market and let the market catch up. NO
Some buyers think it’s time to offer well below ask and take advantage of a buyers market. NO.
But of course it depends on where you are looking and where you are looking from.