We just started grinding out results for 2Q real estate trends. Below is the first look at the data. Basically, the trends we have been watching for a few years continued for another quarter. Very little new information here at all; just more of the same. Very stable market. Despite stable conditions, The Wall Street Journal continues to have articles with lots of facts about why this recovery should end soon and we should have a (likely) mild recession. All of their facts make sense, and the arguments always seem sound…. Yet the real estate market continues on.
For your personal planning you might consider IF we did go into a modest recession in 12-18 months…What opportunities and problems would that create for your business? What things could you do now to prepare for that?
For many of you, it might make sense to work harder now (make hay while the sun shines…). If you have potential trade up clients, a mild recession is a mixed blessing. Easier to buy replacement, harder to sell old house. Do your clients know it might be harder to sell their house in a cooler market? Think about those houses that are normally difficult to sell, busy street, strange floor plan, etc. Would it be better to sell those homes now? Are there other reasons your clients might want to get off fence now and take action? If financing gets tougher in a downturn, do they really want to wait?
This may also be prime time to engage with your “future investors” who might be waiting for “things to cool off?”
-Get them to define, in something measurable, what “cooling off” means.
-Can you get up to speed on your investing skills now?
-Can you bring these prospects with you to classes?
-If it is a short recession (I would expect that), the investor’s opportunity will not last long.
-Consider laying the foundation for action now.
The idea of a future recession (however mild or harsh) is certainly top of mind for many of your clients, which provides a lot of opportunity for engagement. How will you take advantage of this opportunity.
Until things cool off, here are the numbers to support another month of stable growth. Here’s data for the TTM (trailing twelve months) for this year vs. last year:
- Prices +9%
-Small homes had more increase +12%
-Large homes had less increase +6%
- Closed unit volume +1%
-Less than population growth
-Depth of pent-up demand continues to grow
- Inventory is scarce, 1.3 MOI
-Not much change from last quarter or last year
-Smallest homes continue to have tightest inventory, 0.6 months
-Biggest homes continue to have the most , 4.3
-Viewed at the suburb level, Cherry Hills would be considered a buyers’ market, with 7.4 MOI… but that’s mostly a function of their average sales price ($2.1 MM)
-All other suburbs are a sellers’ market.
- No real change on discounts; 0% (market price, no discount) continues to be the average
-Smaller homes sell at a 1% premium to ask
-The biggest homes sell at a 2% discount to ask
- DOM (days on market) – essentially unchanged
-Smaller homes averaged 14 days to get UC
-Biggest homes took 69 days.