Is the market starting to level off and give the buyers a little more control?
Came across some very interesting data today while drinking my morning coffee. There have been a lot of price reductions notifications coming across my desk the last week or two. This has been very uncommon lately. For a very long time the market has not seen many reductions in price. That doesn’t always mean anything. There have been a lot of sellers listing their homes over value and knowing they are over value. They are sometimes testing the market.
Looking at the chart there are a few things that should be noted. The chart is the closed price ratio to the list price. Meaning the original list price to the amount the sellers actually walked away from the closing table with. There is nearly a 4% decrease since April of last year. It is also important to keep in mind these are trailing numbers buy at least a month. Reason is about 30 days is the average close in our real estate market. The MLS doesn’t get the sale price until the home closes and is recorded.
Again this isn’t really something to be too alarmed about because there are a lot of variables that go into these numbers. As mentioned above there we have seen a lot of people listing their homes with the attitude of “make me move” meaning they might not really want to move but the market is so hot they test it to see if they can get over value. Another is of course the season. The last few years the market in this area hasn’t really seen a selling season but when the markets calm there is bound to be some adjusting. Another thing is listing agents and sellers alike have been caught up in the fantasy that it will always be a seller market. Unfortunately for them buyers are wising up to this.
The average number of days that listings stay on the market are always another metric to consider when talking about market direction. This chart is across all price points in the front range and Denver Foothills. Obviously the amount of days homes stay on the market are tied to inventory and demand. If inventory is low and demand is high the market will see very low days on market. We are still seeing homes under $400k flying off the shelves. If we look at the entire market our DOM are starting to increase.
There can be a consideration again for the season but as discussed before in the past couple years the season hasn’t had that large of an impact.
From the highest to the lowest point in the market over the last 12 months we see a difference of about 30 days. That is pretty considerable since that is about double.
These numbers are not saying our market is drastically changing by any means. All they are saying we will most likely be seeing a healthy shift away from a market that was scaring buyers off. Buyers never want to be in a bidding war, buyers never want to be competing against multiple offers, buyers would like to have major defects repaired during objections and not have a seller say “oh well it’s a seller’s market”. It is healthier and helps hold true market value better when the market is more balanced.
Orson Hill Realty