Significant Market Changes Becoming Clear
Competition among sellers is increasing significantly. I’ve noticed a very significant change in the rate of increase of inventory levels (the number of homes on the market and available for sale) since the holidays. The number of new listings seems to have doubled, perhaps tripled, and I see a consistently large batch of new listings every day.
Perhaps many sellers were waiting until after the holidays, and some were waiting until prices reached their peak, and others were waiting until the industry analysts announced that the market had changed. All these events seem to have coincided in late 2005, and now it looks like the rules of the game have changed overnight.
I doubt many sellers will be able to eke out 20% increases over prior sales when the average buyer has much more selection, and more bargaining power. One of the factors driving price appreciation was the low supply for the existing demand, with buyers having to compete for homes, and desperate to do so before prices rose above their means. Sellers will have to compromise a bit on pricing and probably price just slightly above past sales to be competitive.
I’ll write more about this topic, and its impact on buyer and seller strategies, in the coming months. I’ll also have better statistics to demonstrate what I’ve been seeing in person just in the past few weeks.