State of the Market- June 2014

On or about March 1st of every year and moving forward for eighteen consecutive weeks, I run a marathon. No, it’s not Boston or the Marine Corps or even the Walt Disney- each of those would require more physical endurance than my 49 year old body could possibly sustain.

 

Instead, as winter draws to a close, I take a deep breath and begin running through the spring real estate market. Like a marathon runner who learns to pace himself, I’ve learned to develop strategies to help me make my way through four and a half months of 60-70 hour work weeks. For instance, every six weeks or so, my staff will change the pass codes to both my gmail account and my voice mail thus imposing on me a needed day off. And, as with any marathon, there are occasional markers that help you to understand how far long along the route you've progressed. 

 

Memorial Day weekend is always my favorite. It marks the beginning of summer and it also serves as a reminder that there are usually just five weeks remaining until the chaos of the season subsides. Once July 10th arrives, most buyers step away from their search. They’ve either successfully concluded their pursuit for the perfect house or they’ve resigned themselves to the fact that their children are going to have to begin the new school year in the same district in which they currently reside. 

 

The arrival of Memorial Day this year proved to be a bit of a schizophrenic exercise for me. On the one hand, I celebrated; I had made it through the majority of the season and we were having our best year ever. Sales were up 13.5% year to date. However, there was an ominous foreboding that I sensed, one that left me a bit ill at ease. You see, the market usually slows down on the Wednesday before each of the three major summer holidays. A seven day respite sets in and the market resumes the following Tuesday. Well, this year, the phones stopped ringing one week in advance of the traditional slow down. As of today, May 31st, activity has not yet resumed. Don’t get me wrong- I’m not predicting the collapse of the local real estate market. If anything, over the course of the past 24 years, I’ve learned to sit tight and wait. However, a two and a half week lull is more than I expected. 

If we’re lucky, Rochesterians are simply reacquainting themselves with a long-absent sun and the selling season will be off and running again. Maybe, as a result of the late start to this year’s market, sales will continue not until the middle of July but, instead, until the middle of August. Certainly, the underlying economic fundamentals are working in our favor:

•    Local unemployment numbers recently dropped to 5.5%- their lowest level in six years. 
•    Thirty year mortgage rates dropped to 4.12%- their lowest level in eleven months.
•    Both the Dow and S & P closed at record highs yesterday (why am I so heavily invested in real estate???)
•    The consumer confidence index rose to 83.0 in May. Last year at this time it sat at 74.3. 

Regardless of the length of time that it takes for the market to compose itself and resume its path forward, there is an annual phenomenon that is soon to set in- one that benefits buyers. As I mentioned earlier, the spring market generally concludes sometime in the month of July. As sellers become aware that we’re preparing to celebrate our country’s founding, many begin to grow nervous. They begin to eye the calendar and suddenly realize that the spring market is drawing near to a close. In order to secure a purchase offer prior to the conclusion of the spring season, many sellers begin lowering their list price in the month of June. They realize that if they are not successful in finding a ready and willing buyer by mid-July they probably won’t be successful in doing so until after Labor Day. Savvy buyers, waiting for their moment, swoop in and try to capitalize on this opportunity. 

If you’re a seller, I have several pieces of advice to help you navigate today’s market. 

•    If you’re just getting ready to put your house on the market for sale, be careful with pricing. There seems to have been an overconfidence on the part of sellers and their agents this year that has resulted in overpriced listings. I’m certainly guilty of thinking that prices had increased more than they actually have. Be realistic. This is Rochester, not Manhattan. Also, be aware that homes are either selling in the first few days that they’re on the market or they’re lingering for six to twelve weeks. You don’t want to suffer that fate! 
•    If your property has been on the market for a while, have an honest conversation with yourself and with your agent. What are buyers saying as they walk through your residence? Pay attention to their behavior. Remember the adage, “Actions speak louder than words”.  Often times, in the spirit of being polite, buyers aren’t honest enough in the feedback that they’re providing sellers. Yes, everybody is telling you that your sponge-painted powder room circa 1987 is gorgeous and the house is appropriately priced. Why haven’t you received an offer?

More than likely, you need to reduce the price. 

At the end of the day, I believe that the strength of the improving economy will carry the day and, ultimately, the local real estate market will be fine. Yes, it’s a bit slow at the moment; however, I really believe that my team’s record-breaking year will continue. Until the market resumes, I’m going to try my best to focus on the fact that warmer weather has finally arrived. And you should too.