It’s been quite some time since we’ve been able to write the following: resale home prices are falling. That’s right boys and girls: the price of resale apartments is-a-goin’-down …
So, while you let that sink in for a second, let’s share some disclaimers and add a little perspective:
- Real estate prices never go in one direction for too long – and our recent streak of 6+ years has been truly a long one. Everyone knew that the pace wasn’t sustainable; the question was when we would see the breaking point of this trend. Alas, now the proof is in the pudding.
- It’s not just that prices have gone up, but over the past several years, we’ve seen nothing but bidding wars, limited inventory and excessive seller exuberance. This has left many sellers with a bit of a God complex, and buyers with a lot more white hair (from the perpetual stress of competing for properties and losing out on bids) and foot blisters (from constantly pounding the pavement to visit open houses and see new property). If you’ve been reading the Apple Peeled for some time, you might have even gotten bored by the same narrative: “yes, inventory is tight; yes, it’s a seller’s market; yes, you need to move at light-speed, and ideally have all cash (or at least a non-contingent financed offer, to have a shot at grabbing that apartment.”
- We believe this is a natural correction to a crazy market that had to slow down and adjust to market realities. This doesn’t make it an easy adjustment by any means, especially to you sellers out there, but as Jonathan Miller, President of Miller Samuels, has put it: “Maybe we’re heading out of the period when there was no shame in overpricing your home. We’re moving away from that and into something more pragmatic: Do you want to actually sell your property or do you want to pretend? Part of selling is pricing correctly or being more negotiable.” The pendulum swings. The farther out it swings, the sharper the swing feels on the way back.
Now, for the silver lining. Buyers, you have some breathing room on your side, and we haven’t been able to say that for years. At long last, you don’t have to pounce on each and every fresh listing within a few days of it coming on the market. You don’t need to study auction dynamics before placing your offer. You can relax a bit, be more planful, and stroll into that open house instead of sprint.
That said: warning to the buy-side wise: properly priced properties that are of high quality will continue to move at lightning speed (note in the article that 14% of properties are still closing above their asking price.) So if you come across an apartment that you feel has the right attributes, the right location and the right price, chances are other buyers will feel the same way.
Sellers, it’s been a great ride … nay, a phenomenal ride. You’ve been able to call the shots for some time now, and buyers have responded. It’s time to take a deep breath and assess your real motivation for selling your place. It’s time to be realistic and be flexible in how you look at comps as you price your apartment.
