Earlier in the year, there were two distinct markets: homes priced below $1 million and homes priced above the same threshold. The lower ranges were red hot and the upper ranges were ice cold. With the housing market transitioning into the Holiday market, there are now three distinct markets: homes priced below $750,000, homes priced between $750,000 and $1.5 million, and homes priced above $1.5 million. We now have a hot, a lukewarm and an ice cold market. For homes priced below $750,000, the expected market time is 3.57 months. This range represents 73% of all active listings and 87% of demand. Buyers can expect increased competition, a higher chance of multiple offers, and sales prices close to their asking prices. Prices are stable within this range. For homes priced between $750,000 and $1.5 million, the expected market time is 6.37 months, a slight buyers market. This range represents 16% of the active inventory and 11% of demand. Buyers can expect little competition and a bit of flexibility on behalf of the sellers, but prices are pretty stable, especially below $1 million. For homes priced above $1.5 million, the expected market time is below freezing at 20.57 months. This range represents 12% of the active listing market, but only 2% of demand. Buyers can expect no competition and a lot of pressure on pricing. The problem with this range is that there is a battle between seller stubbornness and market reality. Most sellers at this level are nostalgic and ignore market fundamentals, unrealistically overpricing their homes. Many are substantially overpriced and still very unwilling to budge off of their prices. They forget that buyers no longer buy on a whim, especially with too much supply. Buyers are strategic and approach purchasing very carefully. There is tremendous pressure on pricing in the upper ranges because prices have been a lot stickier and have not fallen yet as much as the lower ranges. They were a bit late to the party. It is basic supply and demand. There are way too many sellers and very few buyers. Specifically, there are 1,337 homes above $1.5 million and only 65 homes placed in escrow over the past month. The probability of success is very low. Motivated sellers priced realistically and able to patiently wait for the right buyer should stick it out. Everybody else really should just pull their homes off of the market.
This article was written by Steven Thomas, President of Altera Real Estate and provided to you by the Surf City Kahunas of Real Estate: The Louison Team
Raymond and Stephanie Louison
714-925-5361 or 714-307-2934
Altera Real Estate - Huntington Beach Office
All information deemed reliable, however not guaranteed!