The market is slowing down…and not just a little! This is not a bad thing. In fact, I think it is very healthy for the market and helps us avoid a big tumble in the market.
Here are a few interesting numbers that support what was just said….
Inventory: Inventory in the area I focus on, from Pacifica Tower just north of the Freemont Bridge to South of South Waterfront, inventory levels are up 21% since June 1st! That is a pretty big jump in such a short period.
Price reductions: Since July 1st, in the Pearl District, 40% of the listed condos reduced their price.
Days on Market: This one is a bit tricky. Days on market has gone up but one must look at this stat carefully. There is a recent trend that is happening more and more. In a practice that I do not believe in, agents will cancel a listing and then re-list it. It is an attempt to make a listing look “fresh” and show less days on the market to buyers. This is why we must look at Cumulative Days on Market. Now if an agent has it on the market for a month and then cancels and re-list it, the number will reflect those 30 days prior.
What this means in the marketplace? For buyer’s, there is not such an urgency to make a quick offer. Buyer’s are able to look around for the perfect place and have a much better foot to stand on at the negotiating table. For sellers, trying for a premium price may hurt you as your condo may stay on the market longer than it should and in the end it may sell for a lower amount than it would have if priced correctly.
An example of this is one I believe I have discussed on my blog. A little over 4 months ago I went to a Broker’s open house on a beautiful penthouse unit. At that time, the agent listed it for $3,550,000. The agent, knowing that I specialize with condos, asked for my opinion on price. I clearly remember my answer: “ I think it needs to be at $2,999,000 and I think it will sell a little below that.” Well today, after 2 price reductions, it is now priced at $2,995,000. But now, after 4.5 months on the market, you will probably get the sharks swimming around it ready to offer $2,600,000. (It has actually been on the market much longer with another agent that was priced even higher!) … again, this is where you need to look at cumulative days on the market!
Moving forward in this new market, correct pricing will be very important in the sale of your condo or loft!