Market watchers will need extra data tools this year
There was a time when real estate market watchers could keep tabs on the time a home spent on the market before selling and the monthly pending sales report and get a pretty good handle on the market’s pulse. That won’t be the case this year.
The pandemic has pushed the old market forecasting models so far out of whack that some data reinforcements are needed. One that bears special attention is the percentage of homes with price reductions. It employs an extra helping from the “wisdom of the crowd.”
During the past five months, sellers discounted their asking price on an average of 43% of all sales to seal the deal. The trend began with 35% of sales being discounted in August. As of the end of Dec., it had increased to 55.9% of all the existing home sales in the Northeast Tennessee Association of Realtors (NETAR) core area.
That was a pretty good monitor for the crowd of sellers’ mood during the avalanche of media reports that sales and prices were plummeting. Of course, that’s what was happening in some of the major metro areas, but not locally. Local sales have declined while prices have plateaued. Still, the media influence can’t be ignored and many are susceptible to scare headlines written to attract readers.
There were also some seasonal effects at play. The local market hasn’t seen much of that for the past three years, but that, too, is changing.
Time on market, price reductions, and pending sales all point to weaker demand as we head into a new year. Things like the new listings price trend and volume will add to the body of knowledge as sellers gear up for the peak spring home buying and selling season.
While many are bracing for a more turbulent real estate market those wanting to keep their finger on the pulse of the local market are going to have to do a little more research.
NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in the Northeast Tennessee, Southwest Virginia region, representing over 1,600+ members and 100+ business partners involved in all aspects of the residential and commercial real estate industries. Weekly market reports and information for both consumers and members are available on the NETAR website at https://netar.us