As Supply Starts To Flood The Market, The Housing Frenzy Could Be Ready To Take A Breather
It is one of the beautiful properties of supply, demand and pricing. Together, when left alone and not intervened with by the government, they become a way to ration out goods properly and efficiently. Markets eventually correct imbalances on their own and prices adjust according to supply and demand.
This could be what we’re on the verge of witnessing in the housing market. While the market has been in nothing short of a total euphoric buying frenzy over the last year, with Covid’s effect on the economy slowing, it looks as though supply could finally be catching up to demand, according to a new report from the Wall Street Journal.
The insane bidding wars of the last year that have seen houses routinely selling for well over asking prices, many with cash offers that are willing to waive steps like inspection, could be starting to slow as more houses hit the market.
The Journal noted that inventory was now increasing for the high-end market “as owners who delayed selling during the worst of the pandemic list their homes”. Additionally, deals made just weeks ago at the height of the frenzy are falling through, the report says.
Andrea Ackerman, a real-estate agent at Brown Harris Stevens in the Hamptons, commented: “The sales market is not a frenzy anymore.”
New listings in June were up 11% from May and 5.5% year over year. Even though inventory is still down 43% from the same time last year, it’s an improvement from 60% in May, the report notes.
Jonathan Boxer of Douglas Elliman commented: “We all felt, 60 days ago, that we were literally going to run out of inventory. And then things shifted. We started bringing on some new sellers.”
At the same time, growth in pricing has also slowed. The median listing in June was up 12.7% year over year, compared to 17.2% in April.
“I see this current market beginning to look a lot more like a normal market,” Realtor.com Senior Economist George Ratiu told the Journal.
Michelle and Dan Mannix of Brooklyn recently decided to sell their home, telling the Journal about their home: “We used it the whole pandemic and it was a godsend. I would say, ‘We’re never going to sell.’ Then all of a sudden, things started to shift.” They eventually decided to sell when a house a few blocks from them sold for $2.5 million in 72 hours. “That was like, ‘Well, wow. What could you get for ours?’ That got our wheels spinning.”
They listed in May for $2.46 million and reduced the price to $2.196 million in mid-July. Meanwhile, new listings keep popping up. Michelle commented: “It felt like there was never anything, and now, since we put our house on the market, I’ve seen three or four really nice listings.”
And this is indicative of a trend across the country. The number of new listings over $1 million rose 17.5% year-over-year for the week ended June 19, the report notes. Listings priced under $350,000 were down 7.4% over the same time period.
Robert Kushner and Trevor Yoder, who own a house in the Hamptons, are testing the market by listing their home, but also renting it at the same time. “We want to see what the market can bear right now. If it sells, great. If it rents, we’re fine with that as well,” Kushner said.
Wed, 07/21/2021 – 09:50