When I talk about the mood of the market, what exactly am I talking about? What is the market? The Market. It’s a meeting of the minds. A disagreement. A perception. A feeling. A mood, indeed. The market is the mix of what buyers are feeling and what sellers are feeling. Where is the market? That depends on how many buyers there are and if there are an equal amount of sellers. More buyers than sellers makes the market feel frenzied. More sellers than buyers makes buyers scared. An equal amount of buyers and sellers? Well that essentially never happens.
Today the market at the lake is difficult to understand. I continue to believe that roughly 70% of market participants (that’s on the supply and demand side, or buyers and sellers) sense that things aren’t quite the same as they were a year ago. But 30% of the market doesn’t sense anything, and they only sense motivation or opportunity. The motivation is, of course, assigned to the buyer side and the opportunity to the seller side. Opportunity to price a property higher than ever before. Higher than last year, for certain. The buyers can align with some of these sellers and reward a seller who owns a property that should not be rewarded. Alas, while the majority of the market is trying to normalize, some hyper market participants are fueling a continued fire. With September stating in just a few days, it’s safe to say the the fire is going to burn through the end of this year, delaying, but not eliminating, the likely slow down.
If you put your ear to the ground, you can sense a softening of sorts. I watch mountain markets quite closely, and while a recent trip to Beaver Creek revealed the same incredibly tight supply, the Aspen market is showing some signs of cracking and the Whitefish, MT Realtor I talk to fills my inbox each day with notices of reduced prices. A recent article on the Hampton’s suggested the same. I sense the softening here, but it’s not as pronounced as I figured it would be by this date. I would suggest the resurgent equity market (bear rally?) would have something to do with the August uptick in contracts, but that’s just a highly educated, remarkably intelligent guess.
If you don’t believe my commentary about a slowly softening market, consider the signs. They’re all around you, really. Agents don’t yell “THE MARKET IS SOFTENING”. Most of them feel such an admission might be detrimental to their business, and others just don’t have enough business to get a real sense of the market mood. What do the signs look like? They look like more weekend open houses. More inventory. More price reductions. In 2021 no seller chased a buyer. In mid to late-ish 2022, there have been properties on the market here that have implemented regular price reductions to find their buyers. Overshot listing prices were the norm last year, and buyers swung wildly to hit those otherwise lofty price targets. But this year, those who miss their pricing are mostly being punished. There have been some unexpected exceptions, largely due to a misinterpretation of market conditions, but that’s another story that I can’t write about publicly.
If you’re following this market from home, reticent to make contact with me to help guide you through this changing environment, take your market clues from what you see. Watch for the open house signs. Watch for the balloons. Watch for the price reductions. If you pay close attention to these few items, you’ll be able to sense the market direction. What’s that direction? Right now, it’s softening. I don’t care if pricing hasn’t moved downward, because a pause in appreciation is still a softening. And remember, I’m not saying that any form of dramatic value destruction is pending. This is not doom and gloom, it’s just partly cloudy instead of intensely sunny. I see the market today almost exactly where it was last summer. That’s a pause, and if you’re trying to pretend the market is still charging forward like it was in 2021, I would suggest you’re quite wrong. I have three new properties pending priced in excess of $2.6M. I could look to those contracts and from afar assume that these sales prove the market is still ripping. But if I look more closely at each situation, at each price point, at each market experience, and at each collective buyer response, I can see rather clearly that in spite of continued activity, the pricing increases have stalled. For buyers, that’s a welcome respite from the frantic increases of the past two years. For sellers, it creates opportunities to see where the market is and price to that level, not to the level where your hopeful neighbor insists it’s still heading.
Above, my Burr Oaks Farm offering, recently under contract.