My Take on Spring Market Trends

Hi and welcome to my brand-new LinkedIn newsletter (feeling fancy!) where I’ll share my take on what’s happening in my market. This is an on-the-ground analysis of what I’m reading from industry sources, what I’m seeing from my clients and what I’m hearing from the real estate professionals I work with every day.

Ready? Let’s dive into our first A.M. Market Note!

The market is mystifying.

We’re in a funky time right now for the market because there are so many different variables that?could?impact its trajectory. Interest rates have been trickling up and down (though they’re certainly down right now from where they were last year but rising to curb inflation) and massive stock market fluctuations and recent uncertainty in the banking industry has people on edge. Everyone’s been talking about the challenging economic factors we’re facing.

It’s not necessarily a bad thing to identify the fickleness of the market and its obstacles, it simply means as a real estate professional we must take what's in front of us and combine it with our hard-earned knowledge and experience to guide our clients in their decision-making process. Now more than ever, the agent you choose needs to be someone with a deep understanding of their market and the transactional process to best advise their clients on a favorable path forward.

Good listings still sell.

The main takeaway – even in this up-and-down market – is that good listings in good condition will absolutely sell … and they’ll even sell in multiple offers. As a real-world example, a home for sale in Altadena, California just got 27 offers. It was a fixer for sure but it was on a big chunk of land and most importantly, it was priced right.

More than anything, low inventory is controlling our local market. People either have that 3% interest rate and so they’re not putting their house on the market for fear of losing that sweet rate or they have nowhere to go because they can’t find what they want for sale. Both scenarios are putting a serious damper on supply. It doesn't matter if you’re talking about Southern California or Northern California or a move to Tennessee – there are limited listings available and when something good comes on market, you can bet it’s going to move.

Inventory is way up in ultra-luxury markets.

Where we’re seeing a dramatic increase in inventory is in the ultra-luxury market (over $5 million price range in the Valley and over $10 million on the Westside). With this surging inventory comes a lengthening of days on market. Why? Often, ultra-luxury buyers have freedom of choice and time on their side. A lot of them are all-cash buyers who want that money to work for them, so they’re perfectly happy waiting for the best deal. It’s also why some of those ultra-luxury properties are selling at price improvements – they’re priced too high to begin with and savvy buyers know it.

Beyond the ultra-luxury market, the practice of over-pricing was happening with some builders. They’d build a house for $2 million then construct the same house down the street but price it at $2.2 million. Travel two blocks down the road and their third home was priced at $2.4 million and the increases went on and on until people finally said, “Hey, what a minute. I don’t think so.”

Buyers are taking a step back. They’re no longer to overpay for a home that isn’t priced correctly.

Contingent sales are trending.

A lot of sellers today are hesitating to list their home because they simply can’t find anything they want to buy (again, back to that inventory shortage) and contingent sales are a good way to get around this issue. If a client, let’s say, is contemplating selling their home and they look at another house that – with the help of their trusty real estate professional – they determine is well-priced, I’d advise them to go for it. It’s a win-win for everyone.

With a contingent sale, a seller isn’t fully committed until they find the next place to move. Of course that also means there’s no guarantee the transaction will go through. However, when it does go through you end up with a happy seller who has a home they love to move into and a happy buyer ready to make your client’s house their home.

So, the gist is this: Buyers are on the lookout for the right house and when it comes on the market, it may not always get 27 offers like that home in Altadena (that’s still rare) but if it’s a great price, you can still expect it to get 3, 4 or even 5 offers.

Thanks for reading my very first A.M. Market Note! If you have any observations about what’s happening in your market, I’d love to hear them, so please comment below!

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Andrew Manning ? REALTOR? ? Berkshire Hathaway HomeServices California Properties ? DRE: 00941825 ? 818-380-2147 ? [email protected]