What a first quarter in the Real Estate market. Sold over asking. Bidding wars. Bully offers. It seems it was what so many talked about or heard about.
No doubt, the first 3 months of 2021 has been a wild ride.
A little side note for clarity. Did you know that we had pretty much the same number of listings in the first 3 months last year? In fact, in the first 3 months of 2021, we had more listings than we have had in 5 of the previous 10 years. Supply wasn't really the issue.
Demand was the driving force. Quite simply, we saw greater consumption of new listings than normal. Massive consumption in fact. Over 75% of the homes listed this year sold. In the past 10 years, that absorption level was closer to 55%.
Three key factors contributed to that demand. Lower mortgage rates than we have ever seen; a lower qualifying rate - the "Stress Test". And of course, the covid effect – our lives need and want more space.
What started out in mid-January with 35 – 40 offers per listing gradually tapered to 20 offers per listing by mid-February. And to 4 – 5 offers by mid-March.
Now, in our current market, holding offers is a roll of the dice. Sometimes it works. Sometimes it doesn't.
And this is quite normal for the market at this time of the year for a couple of reasons.
The buyers, plain and simple, get tired of competing. Tired of the emotional roller coaster. So they hold back and play the waiting game.
Couple that with the normal seasonal increase of listings. It happens almost every spring. More homes come on the market, so the buyers shop a bit more and wait to see what new listings come out tomorrow. For 2021, it would appear the seasonal adjustment has begun. Don't get me wrong. It is still a strong seller’s market albeit one without the same intensity.
So, where does this take us in the coming days?
There are 4 distinct listing strategies I am noticing in the market right now:
1. Price low and look for the bidding war. This strategy does continue to work albeit less frequently. As a buyer, why wait for an offer date on one home when there are 5 more you can go and buy today!
2. Price low but the offer date yields no result or one the seller is unwilling to accept. The Seller and their Realtor respond by re-listing at a higher price and wait.
3. Price low but the offer date yields no result or one the seller is unwilling to accept. The Seller and their Realtor respond by staying at the low list price in the hopes that one day they will see the big selling price.
4. Price accurate based on the sold data in the market. The difficulty doing this is the buyers and their realtors see the list price and assume it will sell for more. It takes a bit of time for the market to respond to this strategy. As a result, a great opportunity for the buyers to avoid a bidding war can sometimes be overlooked.
So, over the next several weeks, I do anticipate we will see a more normal market emerge. . One with some predictability and less chaos.
A bold prediction, yes, however one that historically over the past 15 years, has proven accurate.
As always, if you have plans to buy, sell or invest, give us a call. We are here to help you make the best possible decision that serves you and your families goals. Be well. Stay safe
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