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Real Estate Market Update for October 2018

Sellers: don’t price with the expectation of an increasing market

Recently, the market has mellowed as buyers retract. Home sales have continued to decrease for over 5 months as a result, leaving many real estate listings overpriced.

Buyers don’t see the same value as sellers these days which is causing properties to sit for longer, showing longer days on market in the MLS. Sellers contend that they “don’t have to sell,” thinking their perseverance will eventually get them what they perceive they deserve. This is because sellers think the market is stronger than it actually is and that it is still on an upswing which it isn’t.

If a home is priced well (without any wiggle room) and is popular with buyers, offers will come within 30 days. To make your home popular with buyers, simply price it using good sense as if no negotiations were necessary. In other words, price it at your “happy walk-number.”

Selling a home for the highest price relies on a seller being willing to sell at a price that inspires buyers to buy. We often hear sellers say, “I am not going to give my home away.” The translation of that to any real estate agent means, “I am not willing to sell my house for true market value because I want more.”

The reality is that real estate transactions happen when a buyer and seller agree on a price that both can live with. Neither Zestimates nor listing agents create value but an effective listing agent will prove value before taking an offer to contract. In order to attract buyers, one should start with a relevant listing price. The key to knowing whether you are priced relevantly is that you will not just get showings, you will get offers! To get offers flowing, the property’s price must be appealing to all suitable buyers. If more than one buyer recognizes value, then multiple offers can result, and a skilled real estate negotiator will locate the best buyer, meaning the one willing to pay the highest price—possibly above the list price. This process is called proving value.

However, I have recently observed that sellers are too reluctant to adjust their perception of the changing market dynamic. They believe that a strong second quarter GDP at 4.1% equates to eventual higher real estate prices. Unfortunately, the truth is that the market is fully-baked and with the exception of specialized bubble-protected areas, the prices are not expected to rise. All markets anticipate trends and prices shift as a result of anticipation. We are going on the ninth year of this bull market which has set a record. It has reached its peak and as everyone knows, what goes up must come down.

The future for home prices is not a bright one. What we see now is a turnaround in the 7-year seller’s market. Conversely, on the horizon we see rising interest rates (bad for buyers), reduced real estate inventory (bad for sellers), and record deficits, loan tightening, inflation and an imminent recession—likely within a year (bad for everyone).

Adding to the issue, websites like Zillow and Redfin may be falsely inflating property prices by using overly aggressive price algorithms. Some analysts believe that doing so artificially inflates home values. This happens because the algorithms track property listing views and “shares” from the site and then give weight to those data points. The more views and shares a home has, the more their forecasting pricing tool increases the “estimated value.” This is dangerous and could potentially add to a bubble effect since interest in a property does not always directly correlate to offers or a sale.

If you plan to sell your home, do not wait for the economy to boost your property’s value since that will not be happening! List it now, price it right and save some commissions in the meantime by choosing Our Platinum PRO plan offers sellers full service with expert contract representation for a low flat fee.

1st Quarter 2017 Real Estate Market Update from broker Keith Gordon

The way I get a feel for the tone of the real estate market update is through 100’s of our active and pending listings, industry articles as well as dozens of conversations I have each day with buyers, sellers, agents, mortgage brokers and title professionals.

We negotiate many deals each day and this gives us great insight into what I consider to be the most accurate and real-time pulse of real estate.  Any mention of politics in my market reports is strictly intended to share my take on how politics affect the real estate market and are in no way meant as a way to push any particular political agenda.  That said…

Political and Financial Factors Affecting the Real Estate Market Update:

  • The new administration’s Make America Great Again agenda is stalled and I don’t forsee that changing in the second quarter.
  • The DOW breaking of 20,000 was a rally anticipating big business and banks would benefit from tax reform and deregulations.
  • Many predicted that the new administration would have their way but due to failed ACA repeal, one should not expect a fast track to tax reform.
  • The DOW is always very stingy on giving back gains.
  • Overall consumer confidence remains relatively high.

In conclusion, I think the bloom is off the rose.

Are real estate prices slipping? Yes. Interest rates moved up ½% since my last report in December 2016 post-Trump victory. My forecast at that time was steady-to-up for real estate prices and stocks.

What I didn’t anticipate in my last report was a fractured republican effort regarding the Trump agenda nor the Russia-Trump saga.

We are now at a break-point and a few things do concern me, each of which are significant in their own way. Let’s go to real estate prices, the economy and interest rates. It appears buyers remain focused on value. My gauge of real estate is based on our call volume, listing volume (new listings) and offer flow.

I see a mixed bag, still showing signs of possible strength as new listings are coming in at a pace which is 7/10. It feels like 2015 to me and not the sluggish pace of 2016 nor the fast pace of 2014. I do not see interest rates as problematic. What I see as problematic is consumer confidence dropping as Trump falls short of market expectations.

real estate market update
Source: CNN Money

When I say market, I mean stocks more than real estate. Real estate follows signals from other indicators such as consumer confidence and the public’s overall feeling of well-being…in particular, their 401Ks.

At this point, I see stocks and consumer confidence the big question. Amazingly, with all of the political uncertainly and drama, the DOW is still north of 20,000. Should the DOW support crack back through the 20,000 level, I would expect a retest of DOW 1840 followed by consolidation.

The overall Florida real estate tone hasn’t changed much other than Miami-Dade and Naples seem to be softer. These two markets had been leaders.  Manhattan real estate has been said to be softer as well. I feel prices in Florida will remain tempered at best. In contrast, certain cities in the US are reflecting record high sales prices such as Denver, San Francisco, Portland and San Jose.

My recommendation as ususal: price your real estate aggressively with no wiggle-room. Price your homes at “happy-walk” numbers.

Our companies are evolving and growing… and ADDvantage Real Estate: Basic flat fee MLS listing in MLS (and a higher service offering of Platinum Pro through Altru Realty.)  877-232-9695

Altru Realty: Our hybrid company focused on better negotiation practices and seller representation. Plans include Altru Virtual and Altru Concierge).  888-392-4806

PIQ Realty (traditional real estate) with our new PIQ Doc management system; Realtors that want to work with me hang their licenses under this brand.  727 551 4474

New Frontier Title (affiliated business): closing transactions all over Florida; managed and operated by Sheree Akins.  877-544-6447 

Coming Soon…

Showing Bee (our national publicly facing listing aggregation company based on seamless showing technology which is listing agent-centric)

Bee Forms (our national form generator designed to manage and simplify the complicated task for MLS data entry forms)

Move in Virtual Tours (our new photography company created to support Altru, PIQ and ADDvantage customers with advanced Matterport 3-D immersive technology and HD enhanced magazine quality photos. We are open for business in Tampa Bay extended and our new NY operation.

New hires and operations:

  • Opened Altru Branch in Buffalo, NY (lead by broker,  Renee Golda-Widman)
  • Hired a new negotiator/Altru Concierge/Altru Realty (Toni Lupo)
  • Hired another closing coordinator for Altru Realty to back up our star paralegal closing coordinator, Marci Kunzig (Lynn Simonton)
  • Hired new SEO/SEM company for Online Digitial Marketing: Accent Digital Marketing 

In other news, I am about halfway through writing my new real estate book.  The book will reveal insider perspectives geared to help the consumer prepare for buying and selling real estate . Some of you have spoken with me and understand my take on pricing and negotiations.  In my next blog, I will share an unedited excerpt from the book.  The topic: Wiggle room is good…everyone wants to negotiate, right?  NO—they don’t!

Stay tuned for more and as always, thank you for choosing

Best Regards,

Keith R. Gordon

Authorized Broker for GetMoreOffers®

ALTRU® Realty

ADDvantage® Real Estate Services