Is market softening? How does your local market look?

108 Replies

@Joanne Tsai

It's hot compared to pre pandemic market but not as hot as several months ago.

Now some good properties sit for a couple weeks, overpriced properties have to cut prices to reality, etc

But SFH that are in good condition and in good neighborhoods still sell within a few days to a week.

Eventually the crazy train had to slow down, you crammed two years if demand into 6-8 months.

The market is going to remain a sellers market for the foreseeable future though, just not enough supply to satisfy the demand and that will take years or a recession to fix.

Builders in Cincinnati can sell anything new for 600k+, where this money is coming from I don't know, but if there is no motivation to build smaller affordable homes so at least in my area it's going to be a sellers market for a while.

@Joanne Tsai just listed a place with no comps in the area that were close to the price, we were listing at the top of the market for this remodeled home. The price was $100,000 more than any comp in the area, that last one that sold was 6 months ago and not remodeled for context. We just got an offer over asking and going to get another. What's fueling this situation and the current pricing increase for the last 1+ years is the lack of inventory, and it's going to continue. 

Many local markets (including the Sedona housing market) are red hot. I *have* noticed a brief wave of "softening", not only here in Sedona, but nationwide. Nothing I'm concerned about, as these "waves" are natural and expected- they occur in all markets, not just real estate. Our "softening", is in the form of 10% of listings taking a few weeks to sell, instead of selling within 2 days. Meanwhile, the other 90% of listings are still selling within a week, many of which going off the market within 1-2 days.

If, in your local market, you are seeing more softening then this, consider looking elsewhere. Many markets are still on the front of this appreciation wave. Take advantage of it, while it's still lava hot.

@Jessie Kristie In my market, we have had a lower inventory for years, although now it is super low. Anyways, in past years, at the start of every new season, for us, prices tick up. 

I.e. If home trends of a particular kind price at $400k in April, although they might trickle down as DOM increase, by June the price of like-kind will be $425k. Same trickle down effect, yet by September new listings of same-kind will be $450. 

You have to study the listings and look for the trends, and you will find what is prevalent in your area. In my area, it is like clockwork how prices increase about every three months. Sometimes the seasonal price increase is less than $25k, but the increase by season is usually higher than the decrease incurred by DOM. This creates a higher next step up, then decreasing plateau, followed by a higher next step up effect.

So for all the investors that have observed some softening in your interested markets, what’s your strategy now?

Are you selling your rental properties or you are taking advantage of the current softening or you are expecting further softening and waiting to catch better deals later on?

For the realtors, have you noticed the investors behave differently in the recent months/weeks?

@Joanne Tsai Great question and it's very intriguing to see the different responses and input! I can't speak to all cities and markets but I can speak about San Antonio. It is still hot and definitely still a seller's market, however with that being said homes are starting to sit more, I'm seeing more homes come back on the market, and I'm seeing price reductions. I believe it is starting to "cool off" just a bit but it isn't dramatic. It certainly isn't as crazy as it was before but it's still a hot market.

I believe some people are realizing they can't just charge whatever they want anymore, because of appraisals which is the reason for a lot of price changes, and/or back on market's when the deal falls through. It still certainly is a tough time to be a buyer but things are getting a bit easier. We will see how the market looks once the court starts opening up and foreclosures and evictions start happening.

@Steve B. I just did a 1031 out of Portland and while I did get a great price with 12 days on the market the other end of the deal was the worst experience of my real estate life. Don't sell is not bad advice unless you aren't looking to reinvest or maybe go into another market. I just moved over to the westside which was hotter than Portland buying into multiple offers. Not fun!

Where I am places are still selling at a good pace.  There aren't as many of the starter type homes on the market as many of those sold in the spring.  Even when things were selling fast, you could still negotiate as normal.

The amount of listings seems to be stagnant in Columbia, SC. Plenty of buyers still but not a lot of sellers, at least in the downtown zip codes.

Can't blame those for not wanting to sell. I mean, where are you going to move?

Prices were raising all summer in my market and houses were going contingent the day they were listed. People just keep listing at higher prices trying to test out the top of the market. Now we are starting to see houses sit a few days or a week, but still selling fast. It is hard to call it softening when it is higher prices that is slowing it down. 

Every market is different of course and how states handled COVID is affecting population and business growth. 

Things are cooling in the Dallas area as inventory has increased. I’m seeing a lot of price decreases on Zillow.

Originally posted by @Joanne Tsai :

@Larry Fried @Jay Hinrichs @Steve Milford

it seems west coast still remains hotter than the east coast. I def have heard that south CA and the Bay area are still crazy markets. 

Yup, that makes sense since pre-Covid inventories were already very low in most major West Coast markets.  Eugene was 2nd lowest in nation, Seattle first, San Francisco 3rd.  

I'm in the Bay Area (Northern CA) and mostly help home buyers. We are still seeing multiple offers on properties, no contingencies even on the 100+ year old properties that need a fair amount of work. 

It does feel softer in the past 2 weeks. Some properties are lukewarm and I am seeing more price reductions. Still, majority of the good properties are receiving 5-10 offers at least and selling way over asking price. 

Also another note. Last weekend, a ton of open houses. This weekend, less open house activity. Maybe Delta is scaring folks? I don't want to speculate too much, that could be random but wonder what you all think about this variant and its impact on your local RE market.

@Jeff S

Yes that's the problem with the correct 1031's if you want a low maintenance syndication. All the low hanging fruit has shriveled up. No more Arizona retirement Homes or rehab, evict, and reclaim-rent apartments in Georgia at 10% ROI's. The syndications now are like 1.5% after you pay your syndication agent. Maybe @brian Burke or @joe fairless has have better options

@John Morgan

Yes I noticed that too. DFW has been a crazy market in the spring. Do you foresee the price increase to plateau soon? Or you think it hasn’t peaked yet?

Are buyers still waiving contingencies?

The couple towns I have been paying attention to around that area, the rental inventory is still quite low. Are the buyers now mostly for owner occupied? DFW is known to draw a lot of investors, I wonder if they are still actively buying or waiting it out a bit. Any insights would be appreciated!

@Theresa Harris

Are you in FL?

I’m very curious about how things are going in FL….. there seems to be a lot of companies moving in esp in Tampa area. And the price on the east side has already been quite high…..

@Allen Wu

I’m really curious about Cape Coral as we previously looked into investing there. It doesn’t seem other than owning a short term rental, there are other viable options. We are also a little concerned about not having enough activities there other than retirement and vacation.

I have noticed the activity there has been crazy since winter, are you saying even in the middle of the summer, the price continues to climb higher? I’d think fewer people would be looking there due to the off season in tourism (but I could be totally wrong!).

@Joanne Tsai The market is showing signs of softening however we aren’t sure if it’s because of people on vacation. We should have a better idea at the end of this month. There are more homes on the market and interest rates were rising but they’ve taken a dip this past week so I would say just watch it and every state is different. We will see a lot of foreclosures and short sales starting in fall/winter.