Do you want to know what one of the number one trending searches on Google was in the past week? The conditions of the housing market. So why am I writing about it, and what does this mean? Well, it means both fear and curiosity.
It’s either fear causing consumers to be curious or curiosity that will cause consumers to be fearful of what’s to come.
This trend shows us what consumers want to know, so we should go give it to them. Give them the market update they are searching for.
I recently talked to several brokers in 10 major metro market MLSs, including Dallas, Detroit, Denver, Orlando, San Diego, Baltimore, Chicago, Minneapolis, Sioux Falls and Phoenix, and here is what I have learned.
DISCLAIMER: No, I don’t have a crystal ball, and certainly, something could move us back in the other direction, but all the economic indicators that those of us on the ground follow, aka what we’re currently experiencing each day, tells us that prices are coming down and will continue to do so for several months.
Create content that has the data consumers want
There has never been a better time to create content around what’s happening in the market. While everyone loves the silly/attention-grabbing videos of you pointing and dancing (keep those up, too), now more than ever, consumers want to know what is going on with your local market and what they can expect as it shifts.
Tip: Stop listening to people that are not on the ground with you, who are saying prices aren’t and won’t fall — they are looking at market stats and not what’s happening at the moment.
Think about it for a second: Even if your current market data for June 2022 says that prices were up yearly, that’s based on closings that took place in June, which went pending in May and on the market in April.
That means when that listing went on the market in April, its list price was based on comps from December through March, and that market told a very different story.
Was your market different then? Of course, it was. What happened in March and April is nothing like what’s happening now, so those comps have almost no value.
Not convinced that prices are coming down?
Go ahead and pull your market stats and compare price increases in Jan 2022 vs. Jan 2021. Some of you may find a 20 percent to 30 percent increase year-over-year.
Now go ahead and look at May over May (or June if they’re out already) of this year vs. last year. What do you notice?
Weird, it’s not 20 to 30 percent, is it? Nope, it’s more like 5 percent to 15 percent, depending on your market. Now that information may make you reconsider that prices do have the potential to come down.
OK, still not enough for you?
Go ahead and take a look at the following in your market and report back to me:
1. Ask your local lender to get numbers from their company or underwriter on how many new purchase mortgage applications there were in June of last year vs. June of this year. That number is down unless the mortgage company is newer or running a sales contest.
2. Look up your Showing Time (or MLS showing records) stats of showings per listing. You can narrow it by zip code, price ranges, etc. What do you notice?
3. Go ahead and pull the Price Reduction stats on average daily price reductions now versus this same time last year. Anything different?
4. How do the new listings vs. pending sales compare to this time last year?
5. What about Expireds? These are listings that were priced based on Q4 of last year and Q1 of this year, and they aren’t selling because prices aren’t where they were, and sellers weren’t willing to reduce because no one was reporting the falling prices (yet).
6.) What about pending sales to closed sales?
In the last 5 to 7 years, nearly 95 percent of every deal our team wrote made it to the closing table. Inman recently posted a stat from June showing that only 85 percent made it to the closing table due to 60,000 pending sales canceling.
Again, another sign of buyers’ remorse. Could this be because they feel they may be overpaying? This subtle pullback will lead to sellers putting back on the market at lower prices and offering to sell to these same buyers at lower prices.
This is already happening.
So tell me again why prices aren’t coming down and won’t be?
Jeff Glover is the founder of Live Unreal Companies, the parent company of several real estate related businesses including the No. 1 homeselling team in Michigan, real estate brokerages consisting of over 600 agents, a homebuying mobile phone app and is also the No. 1 producing real estate coach in the country, selling over 100 homes annually in the last decade.