What's up with this market?
Some properties are getting snapped up right away and others are lingering. The question is, are we just experiencing a normal late fall slowdown, or are we starting to see a shift? Are buyers distracted or deterred by the chaos and uncertainty swirling around us during this confusing and contentious political season, or are we finally witness a slacking off of the white-hot demand that has driven greater Cambridge residential real estate sales since the fall of 2012?
Truth be told, no one really knows quite yet. The answers, as our newest Nobel laureate once put it, are blowin' in the wind. So this seems like a good time to pay close attention, and possibly even consider adjusting our strategies, and our expectations.
The numbers tell a two-part story
On the one hand, spring and summer residential sales were extremely robust across nearly every sector of the marketplace, from high-end single family homes to moderately priced condos. As of this writing we've seen a 12% year-over-year increase in the average sales price of Cambridge condos, and on average those units sold for 6% higher than their asking price.
That's all good news, right?
But at the same time, the number of available condo units today is roughly 15% higher than at this time last year, and the majority of those units have all hit the market in the past few weeks. This increased supply should be welcomed by buyers, who have more properties to choose from, and should not present any real threat to sellers – assuming demand remains as strong as it has been over the past four years.
But therein lies the question…
Can demand remain intense indefinitely, or at some point will it have to mellow?
And, if demand were to decline, what could that mean for the market?
- We might see the amount of time a buyer has to work with when making an offer expand, from an average of 15 days as was the case this past spring, to something a bit more palatable, say 40 – 60 days, as used to be the norm before 2012.
- We might see prices escalate at a slightly slower rate than they have in the past few years.
- We might see fewer competing offers and more traditional conversations between buyers and sellers.
In other words, we might find ourselves on more solid ground, which frankly, in our opinion, would not be the end of the world.
Cambridge remains an unusual market. Unlike many cities and suburbs, where new construction represents a significant portion of the inventory at any time, here in Cambridge the old adage really rings true: they're not making any more of it. We don’t believe that anything in the recent market trends suggests that a change in the weather will bring about a meaningful market decline, but perhaps we might begin to see a more balanced environment in which both buyers and sellers can accomplish their goals.
So let’s take this moment and work with it, one step at a time. If, in the fullness of time, the wind shifts further, we can always adjust our expectations again.
Takeaway for Sellers
For the moment, you may not be able to count on getting multiple offers the first week your property goes on the market. As a result, we should consider a pricing strategy that brings you the highest possible offer from one truly interested buyer, rather than counting on competition to increase the selling price of your property.
Takeaway for Buyers
This is a great opportunity to catch your breath, to explore the market without so much anxiety and pressure. Don’t assume that a property is overpriced just because it's been on the market for more than a week. Consider the asking price seriously, and take advantage of the moment to have a healthy conversation with the seller without worrying so much about other buyers.