What I'm Seeing

Suspected pent up demand from Buyers in 2024 is being realized.

There is pent up Seller demand pressure cooking but won’t change, in my opinion, until rates get under 6%. We have conversations but they don’t act.

The seller “rate lock” continues. Even if/when we see sellers start to come to market I don’t expect a buyer favorable shift in supply/demand. As rates trend down every seller will be a buyer (1-1) and a disproportionate amount of new buyers will come into the market.

Obviously traffic is slower in the colder months, however, the buyer demand of October-Jan was pathetic compared to after the new year. It's night and day. Same prices, same high rates, just many more buyers in the market currently. It's psychological.

Buyers felt rate shock, retreated en masse, hibernated for 6 months, and all woke up at the same time as they tend to do. Time reset expectations.

My weekend experience

Showed a $million+ property in Tartan Fields, a beautiful home/plan 6k sq. ft., in an A+ location, in avg. condition. There was a line of cars down the street and overlapping showings. Not used to seeing this in that price range. While the $million+ market has been steady the new found pent up demand in this price point was apparent. Probably more of an extra low inventory story than a buyer demand story. We lost in a multiple offer scenario above list price despite our strong cash offer with great terms.

I have a great buyer $900k-$1.3mill in Dublin/Powell. Any sellers?

I listed a property under $500k in The Lakes of Powell. This home was on the small side for the neighborhood but was impeccably maintained with great updates and “move in ready”. I had 21 showings day 1 (would have probably been only 5-7 in Nov) and non-stop foot traffic the following day at my open house. We negotiated a well over list price contract for the seller with a well qualified physician.

What I observed from the listing side.

1. The amount of buyers in the market has quadrupled from months ago. Traffic increase is greater than the typical Spring pickup. It's nowhere near 21’ crazy, just dramatic vs. months ago when traffic was shallower than most would guess.

2. Most of these buyers still are quite “rate shy” and have lower downpayments resulting in a disproportionate higher demand for homes that don’t need work. Most buyers feel cash strapped and rightfully so. ($500k home with 10% down is approx $3900). Not cheap.

3. Most of these “rate shy” buyers are willing to offer, but not willing to splurge well above list price. (This is 90% of buyers right now). Skittish. They end up being used as leverage to get the best offer from #4 buyers.

4. Most of the winning bidders (top 10%) in the market have access to cash or family help putting them at an unfair advantage and are being awarded… after the majority of buyer traffic (#3) are used as leverage to get their best offer. There are enough of this cohort out there to keep the market bustling.

Expectations Moving Forward

I don’t expect inventory to dramatically improve this year. More of the same. Don’t expect a change.

I think we could see rates remain a little higher for longer. Inflation remains sticky due to under the surface govt spending(infrastructure plan,etc…).

FED wants to see something break, they will get it from bank debt distress at some point. Probably don’t see cuts until later in the year.

Look for softening rents(apartments). Mucho apartment supply coming to market in the next year. Cbus will absorb this better than most other cities. Rent is a major component of the fed’s inflation calculation so hopefully helps it come down.

The commercial real estate market is a slow moving train wreck. Banks and investors/owners are disincentivized to publicly discuss this. Billions of bridge debt is coming due in 24’-25’ and these properties don’t pencil at current rates/terms, they can’t sell and they can’t refi. I suspect we see a couple bank implosions and many commercial foreclosures/workouts in 24-25’ Probably peaks post election.

Despite all this mess I don’t think it affects residential much at all. Other markets in the US maybe…not Cbus.

Residential price appreciation of 3-6% in 24’. Will be higher should rates come down before the end of the year. We will still see modest growth if rates remain elevated.

Have a friend or family thinking about buying or selling?

Shoot me a note!

Mike 614-226-6503