Can you time the real estate market?  Does it matter?  How can you win anyway?

If there is one thing that I’ve learned after twenty years of selling real estate in New York City, it’s this:  You Cannot Time The Market.

The flip side is the myth that nearly every buyer or seller holds onto when they go to market- it’s the exact opposite-That they CAN time it.  Everyone wants to  buy at the bottom and sell at the top of a market cycle.  This article at Fast Company does a good job of laying out the basics of this mentality. 

But it’s just not that easy.  There are many moving parts which make it very hard to call a bottom- or a top:

• Rising inventory, or rising mortgage rates, does not automatically mean lower prices.
• A falling stock market will not necessarily create what buyers want, either.
• Property prices didn’t fly up when the equities market was strong in 2018 and 2019- when mortgage rates were SUPER LOW.
• Prices only dropped for a nanosecond during COVID.

Really, no one factor is going to move prices in a buyer or seller’s preferred direction.  And worse, even if you end up getting a deal, it may not look that way in the moment when you close.  It may take six months or longer for it to be clear to everyone that the market hit a bottom- or reached a top.

Trust The Trends

So Where Are You Now?   Do You Think It’s a Good Time To Buy?  Do You Want to Sell?  How Can you Get Confident in Your Decision? How Can You Still Win?

You Can Look At The Trends, and Generate Some Takeaways.

• Supply of properties is down 5% across the market.This would indicate that inventory, still low, would support continued pricing where it is today.  Perhaps not price appreciation, but certainly not softening.  Supply is still very tight.  There is only 5.3 month supply and the West Side has the tightest inventory with only 4.1 month supply.  Further, August was the second consecutive month decline in supply after increases in past 5 months.
• Median Days on the market- Not the average- is 54 days.This would indicate that more than half of properties are going into contract within two months of going to market.  For a market where buildings require 20-25% down minimums- and often 30-50% downpayments, this is very encouraging for the pace of the market.  And don’t forget that even in the best market, some buildings have such strict requirements that they can easily take 6-12 months to sell, if not longer.
• Net New Supply Is Down Almost 19% From Last YearIf a seller is considering going to market, she can simply see that the next amount of property against which she’s competing is slower right now.  I haven’t given any anecdotes, but I will share that many buyers right now continue to express their frustration that “there is nothing to buy.”  Does that sound like a buyer’s market to you?  Sellers should rejoice.
  

  inventory is still down compared to 2018

• Pace of Sales is down 16% Year Over YearThis would excite buyers, wouldn’t it?  How can you not be excited to see sales slow down?  Well, not so fast!  Don’t forget that the pace in 2021 was about 60% higher than what is typical for a very strong seller’s market.  So being down 16% doesn’t seem so great, anyway.
• Monthly Contract Activity- Units going into contract is down 36% Year Over YearThis is an even more tasty morsel for a buyer hungry for a deal.  Oh my god, you say!  Well, let’s not forget that, again, when a market was up 60% above norms, that a drop of 1/3 in the units  going into contract is significant.  But in context, it’s not close to the snail’s pace of 2018 and 2019.
• Properties Taken Off The Market Was Up 11% from 2021Again, buyers are drooling when they think of all the properties that were not sold, but represent what could be back on the market come this Fall.   The flip side of this is that the number of units removed from the market- which is normal in the summer, was actually DOWN 18% from 2021.  That is, more sellers are holding fast.   And inventory is still down, and trending lower, than 2018.

You can start to see why it is confusing.  How Can You Still Win, Even If You Can’t Time The Market?

1. Ask questions of yourself about the assumptions you are making?  Are they true?

   – If rates go up, prices go down
   – If the stock market goes down, so will prices- by the same percentage
   – There will be distressed sellers
   – I see the market is going down in the suburbs.  It must also be true in Manhattan.
   – I will be able to buy if everyone else is freaking out about the market.  That is, I think the market is at the bottom, but no one else does.

   These are but a few of the things that people think about, and they haven’t really considered the full ramifications on pricing, even if they are right.  For instance, will a 20% stock drop equal a 20% drop in the real estate market?  Highly unlikely.  You can quickly debunk or dispel other assumptions, if you just pause for a second.  You’ll be much more confident, and able to look at the market with clear eyes.  Which brings me to my next point.

2. Trust The Trends

   If you study the charts of today- and speak to an expert agent- you may see what I’m seeing, which is that the market is probably less likely to drop than to slightly soften.  Confidence is key- and if you think the market is softening, make slightly lowers today.  You’re likely to find a seller who reluctantly agrees with you, and will do a deal at a price you can be happy about.

3.  Life Your Life- and Get the Best Deal You Can.

   I know it sounds trite, but if you fall in love, you’re not waiting for the next person to come along.  You’re not waiting for attractive people to stop moving to New York.  You are ready to commit to that person now.  If you are ready to buy, that has nothing to do with the market.  You can be considerate, thoughtful, cautious, even skeptical about market hype.  But in the end, it has nothing to do with the market.  If you find a home you love, it’s going to benefit you far more than if you had timed the purchase slightly better- which I’ve already told you is nearly is nearly impossible.  So live your life.

   Again, the big reminder- you usually don’t know what a good deal looks like months, or years, later.  No one, not even experts, usually shout from the rooftops about a market bottom (I did one time in 20 years, in November 2020)- how are you going to determine the right number?    It’s an educated guess.  How can you make your guess the most accurate?

4. Hire An Excellent Broker

   I couldn’t write something like this without tooting our own horn.  We are conducting sophisticated research and applying our proprietary, proven system to ensure you get the best deal possible.  Of course you’re going to get a better deal with our partnership.

If you want to learn more, get more confidence about your purchase or sale, be in touch.  We’d love to help you find a home that works!  -Scott