April 14, 2022

SPRING SHIFT

We’re in the middle of our spring market, and while homes are still selling, the energy level in the market has changed significantly.

For those of you that know me or have read some of my older posts, I’ve been around for a while. 35 years in this market and I’ve got to say it seems like deja vu all over again!

I remember how things felt the last couple of times the market shifted and changed directions.

In 2008, we mostly dodged a bullet while our friends south of the border were wiped out. We were still impacted by the frenzy in the US market then, and we were lucky that our mortgage lenders and bankers were not like the cowboys that ran things in the US. We saw a significant slowdown in the market and some pullback in prices, while hoping and praying the meltdown in the US housing market wouldn’t creep over the border. There was a lot of fear and anxiety with buyers and sellers that were trying to time the market and couldn’t pull the trigger.

Our dip was shallow and the recovery relatively quick. The US market took 5+ years to recover and in some states even longer.

I’ll go back further to 1992. Houses were moving quickly, holding offers wasn’t a thing back then, and we didn’t have the technology and instant access like in today’s market. Still, if you weren’t paying attention, you missed out. You could always wait 3-4 months and that house would be back on with a fresh coat of paint, grey or beige carpet and some new appliances – along with a $50-100K price increase. We also had double digit interest rates at the time.

One month we had a roaring seller’s market, and the next month it was like someone turned off the fire hydrant.

Exuberance became pessimism.

Don’t get me wrong, I’m not about doom and gloom.

However, I am seeing similar conditions and emotions today that existed some 30 years ago. Some of you may remember, most won’t.

The funny thing about the real estate market is that it’s a lot like a forest. When you’re deep in the woods, you see the trees, but it isn’t until you step back do you see the forest emerge and you get to see the bigger picture.

The next few months will be filled with opportunity for savvy buyers and sellers. We’ve reached the high-water mark in prices, and we are starting to see some pull back. It’s not instant nor severe, but subtle. We are still experiencing multiple offers in many segments of the market, but there just aren’t as many people showing up on offer night, and the spread between list and sale price is narrowing. Some properties are still getting crazy prices, but it’s not a given anymore. More and more we are hearing crickets on offer night. Sellers wondering what went wrong? Buyers sitting on the sidelines, burned out and frustrated.

Astute buyers are realizing that the balance of power has started to shift, and just maybe we’ll start to see a novel process called negotiation start up again.

Smart sellers have realized that the days of bully offers and huge offers over list price are numbered, and many have started to price their homes to market.

We’re coaching patience.

Believe it or not, the long-term average days on market for homes has always been closer to 60 days. Not 6 days, but 2 months.

People used to ask me what’s wrong with a house when it sat on the market for over 2 months. Now we hear that after a week.

Get ready for a change in the market. Interest rates increasing, rising energy costs, war and unrest in the world means people will naturally become more cautious and pessimistic.

There will always be opportunity, and we now must be a little more diligent in our choices.

Markets will rise and fall as a normal course of life.

I will always be bullish on real estate, and I play the long game. So far that’s a strategy that has worked out.

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