The Wait-and-See Market

A new trend may be worth watching over the course of the next few weeks and months. We are definitely in the midst of a real estate market correction, whereby overly ambitious pricing is being adjusted downwards. We have seen more price drops in the past three months than in the past three years…combined! Fall seasons can often start slowly, although this year things were compounded by the Summer Equity Market correction, slowing global and Chinese growth news, terrorist events in Paris and a super-strong dollar that is discouraging foreign buyers. The result is a form of a “WAIT-AND-SEE” market.
One trend is emerging that I find encouraging: when you do lower a price, or entertain a lower offer, it appears another bidder emerges….and the pricing that at first appears weak, strengthens. We have had this happen twice in the past few weeks. This is a sure-fire indicator of a ‘wait-and-see’ market where buyers wait and see what will happen to pricing and you often hear the words ‘call me if someone places a bid’. This indicates buyer fear that if they bid now they may overpay. “Wait-and-see” markets are painful as Sellers vent all their frustrations on their agent who simply cannot force bids out of buyers. Who in our industry likes waiting, least of all agents? These markets can be especially valuable to buyers as they have the ability to establish a new understanding of valuation based on their opinions, news items and fear.
WAIT-AND-SEE markets do have a silver lining: buyer build-up. As more buyers hold off their purchase, and fewer sales take place, more buyers build up wanting to buy (especially in a low interest rates environment!)…..and then at some point one breaks through…..and like sheep, the others follow suit.  We have witnessed this type of market before. After months of slowness and uncertainty (and price drops), the market re-awakens and the first quarter is fueled by notably higher activity. The optimism of Spring, the ‘life must go on’ mentality combined with bonuses (even if they are smaller) fuels activity.
Lets see what happens this year. I see the rumblings of a repeat performance.