This usually scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. Please submit your inquiries to him via email for response in future columns. Video summaries of some articles will be discovered on YouTube on the Ask Eli, Live With Jean playlist. Get pleasure from!
Query: Have you ever seen a change in the actual property market these days?
Summer season Slowdown is Regular, Possible Extra Pronounced in 2021
It’s regular for the actual property market to decelerate as we transition from the depth of the spring market into the summer season market and we (myself, my colleagues and lenders I’ve spoken to) have seen that shift over the previous few weeks.
I don’t assume we’re wherever near experiencing a market correction, however I do assume the change in market situations from the spring market (which actually started in January/February 2021) to the summer season market can be extra pronounced this yr due to COVID.
Patrons Extra Distracted by Journey/Occasions
Now that almost all of our purchasing inhabitants is vaccinated and companies/occasions are open, patrons’ consideration is lastly being centered on journeys, occasions, and visiting family and friends reasonably than solely on their dwelling search. Diversions are normally highest in the summertime and across the holidays, thus traditionally slower markets, however this summer season and vacation season can be met with an unusually excessive variety of distractions for patrons. (That’s a great factor!)
Asking Costs Catching Up
One other issue within the shift on this summer season’s market is that asking costs are lastly beginning to catch up, in lots of instances, to precise market values. Throughout the first 3-4+ months of 2021, the gross sales knowledge (offered costs) wasn’t there or wasn’t sufficient to offer sellers the arrogance to extend their asking costs 5-10%+ over 2019-2020 costs, which is why we’ve seen such excessive worth escalations this yr. Now that asking costs are falling extra in step with what the market is prepared to pay (based mostly on my expertise over the previous 4-8 weeks), the variety of presents and wild escalations ought to subside.
What Possible Will/Will Not Occur
Owners planning to promote shouldn’t fear that the underside is falling out of the market, however expectations ought to change in comparison with earlier months. Right here’s what I feel the shift will and won’t seem like:
- WILL end in fewer complete presents on aggressive properties
- WILL end in fewer properties promoting throughout the first week
- WILL end in patrons negotiating higher/extra contingencies
- WILL end in much less excessive worth escalations
- WILL end in fewer properties listed on the market (doubtless a 20-30% drop in comparison with March-Might)
- WILL NOT end in costs falling (costs ought to stabilize)
- WILL NOT end in a purchaser’s market
Spring vs. Summer season, 2016-2019
Let’s check out how the Arlington actual property market shifted from spring to summer season from 2016-2019 to offer some historic perspective. I didn’t embrace 2020 as a result of it can at all times be an outlier that gives little worth for historic developments/context. I checked out 4 knowledge factors that I exploit to measure market situations:
- Share of properties that went below contract inside one week of being listed
- Share of properties that offered for at or above the unique asking worth
- Common offered worth in comparison with the unique asking worth
- Variety of properties listed on the market
Here’s a abstract of findings from the charts shared under:
- The depth of demand (below contract inside per week and houses offered for at or above ask) dropped from the spring to summer season season all 4 years, excluding a slight enhance within the properties being offered for at or above ask in the summertime of 2019 (doubtless as a consequence of a major drop in provide because of the Amazon HQ2 announcement in November 2018 placing upward strain on costs all yr).
- The typical offered worth to authentic asking worth dropped every year besides 2019 (remained virtually unchanged) suggesting much less excessive escalations and extra worth negotiations.
- The variety of properties listed on the market in the summertime dropped by about 20-30% every year in contrast the spring market.
Should you’d like to debate shopping for, promoting, investing or renting, don’t hesitate to achieve out to me at [email protected].
Should you’d like a query answered in my weekly column or to debate shopping for, promoting, renting, or investing, please ship an e-mail to [email protected]. To learn any of my older posts, go to the weblog part of my web site at EliResidential.com. Name me immediately at 703-539-2529.
Video summaries of some articles will be discovered on YouTube on the Ask Eli, Live With Jean playlist.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with RLAH Actual Property, 4040 N Fairfax Dr #10C Arlington VA 22203. 703)-390-9460.