Happy Fall!
Hard to believe but most of 2018 is already gone! It seems everything these days is moving so fast, we barely have time to catch our breath the news cycle, the markets, life! And wow, did we have an interesting market in 2018 so far! Lots of changes to tell you about, including shifting trends and shifting buyer behaviors.
Looking back at the spring market of 2018, it was robust, houses were selling quickly, sellers’ anxiety about the market was relatively low, and buyers were scrambling, for the most part, to win contracts. Then something happened. Around late May to early June and into the summer, a period that is already generally quieter, the market shifted. Buyer activity slowed down, especially in the $1.5MM+ market. Many sellers found themselves accumulating “Days on Market” and needing to lower price expectations in order to attract the few buyers remaining. Buyers, for their part, are seizing the opportunity that has been created, proceeding to make more aggressive offers, seeking deep price concessions from sellers.
Anecdotally to demonstrate the point: in the last 4 months, in the Whitman cluster of Bethesda, 9 homes have gone under contract between $1.3MM and $1.5MM. The average DOM was only 30 days – that’s in sharp contrast to the ACTIVE homes in that same price range in Bethesda which stands at 141 days and counting. The difference is clearly pricing. Buyers are in search of value, and ready to act quickly when they see it. Also important to point out, 68% of the active homes mentioned have had at least one price reduction.
Articles in the New York Times, Washington Post, Bloomberg News, and elsewhere are pointing to a breaking point in major metropolitan areas that have buyers choosing to wait and see. There is no single obvious trigger or cause to the change we’re experiencing. Rather, what we’re seeing is the result of cumulative effects of rising housing prices, rising interest rates, uncertainty about the state of the financial markets given the economic and other policies out of Washington (the markets are bullish for now, but for how long?), as well as more specific local market factors which I will elaborate on.
As it relates to our local market, I’d like to focus on two main factors that put together, have affected the local real estate market and in doing so created a domino effect on other market segments. One such factor is that the baby-boomer population is aging in place. This is not new, I’ve mentioned this trend in my reports for the last couple of years. This trend is growing,however. Now more than ever, baby-boomers modify their existing homes that they have owned for a generation, making it possible to stay and substantially delay a sale and “downsize” move. The reason for many is simply cost. Staying in the Greater Washington Area (rather than moving out of state), often times means the acquisition cost and carrying costs of a condo in a reasonable building that offers reasonable amenities and reasonable living space, is cost prohibitive. For many, the move is either lateral (best case scenario) or a significant move-up, which they cannot afford.
The second major, local contributor to the trend in Bethesda-Chevy Chase is the decrease in “move-up” buyer activity from DC. This buyer is typically in his/her late 20’s to early 40’s. A substantial segment of this population, up until not long ago, was looking to move to lower Montgomery County in search of more “comfortable” lifestyle and/or what they considered a better education system for their new family. We find that this buyer is now staying in DC as amenities, cultural scene, and nightlife have improved over the years. It is now “cool” to live in DC. These buyers have options, and many choose to pay premium in order to remain DC residents.
As you will see in the following key stats, the Chevy Chase market is a bit stronger than the Bethesda market: (source MRIS, as of October 3, 2018)
What Does It All Mean for Sellers?
Adjust your expectations and think about what your property offers versus the competition. Price your house carefully. Consider past sales as a general guideline but recognize that markets do change and that values fluctuate. Think about how you stand out from the competition, and do what you can to appeal to buyers. This is key to your success! As tough as it sometimes can be, try to asses your property objectively and look for drawbacks that may drive buyers away; and if possible, address those issues before you list your house. Understand that buyers are critical and demanding, they look for near-perfect! The showing condition of your home, no matter the price category it’s in, is critical. Give the buyers reasons to get excited.
Call us for a free, no obligation consultation. Doesn’t matter if you’re one month or two years away from selling your home – get expert advice and start thinking about what steps you can take to have a successful, stress-free selling experience.
All the best
