Over Pricing will Persist and How to Gauge

In this market it seems that the next house will be listed for ten thousand more than the last one that sold. This seems to resemble what happened before, history always repeats itself and real estate seems to go up and down. Do we think that the future market will be like the COVID-19 frenzy we have had this year and last year? It is hard to call the market and where it will go, but let’s talk about some key factors in the current market and what to watch.

Key Factor One: The market is hot and continues to be hot with a lot of factors making it happen. The first thing is that as we see the market continue to rise with these market factors, we see people list their homes for sometimes even more than the standard ten thousand more than the next one. This is the dangerous slope downhill when the prices start to rise $100,000 plus over asking. Watch the local trends and be sure to have knowledge in your micro market to know when a listing is just too high for the current market.

Key Factor Two: The market has a high spike in inventory, this tells us that there are a lot more people putting their house on the market. This could just be the season, or it could actually be the times that the housing market starts to go the other way. Be sure to know what your market is doing as it moves. We just saw a quick increase in inventory within only two weeks by 6%. That is a big jump and know we are watching to see if this is consistent, and if there will be a change coming to prices.

Key Factor Three: Demand on the current market, and if this has shifted. The best way to look at this is the Pending sales (homes into escrow). The way a house stays on the market for a while then goes into escrow shows if the demand is high or low (going up or down). Our demand in our market went down by 3% within the last two weeks which is an indicator to keep an eye on. If factor 2 and 3 collide and continue to go up, we will have a future problem.

Key Factor Four: Consumer confidence, this is another indicator with the market has adjusted, or will adjust in the new future if the consumer confidence is up or down. That means, are the people buying a home, product or service aware of the current market and think it is a good time to buy or not. This will swing us one way or the other in the economy.

Key Factor Five: Lending guidelines, if these tighten up to something where they will not allow really anyone to buy a home or condo, this will drop all the first four factors significantly. Banks and lenders alike will dictate the lending requirements on the stability of the market, and that could be before anyone else really knows what is going on within the real estate economy. Make sure that you stay with the mortgage professional that can help you stay up to date on new lending trends.

These five factors are short and sweet but are a really great gauge on what is going on with the market and economy. Keep an eye on things in your market and globally to allow you to prepare for any sudden change and you can make the right adjustments to your strategies.