Of late, I’ve been thinking a lot about Icarus. You know- the nascent aviator who ignored his father’s warnings and flew too close to the sun before plummeting to his death? His tale is often cited as a cautionary parable about the dangers of hubris or excess. Remarkably, the wisdom of Icarus’ father, Daedalus, resonates through the eons and remains relevant today.
By now, everybody knows that both the national and the local real estate markets are ablaze. Sellers have never enjoyed a market so favorably inclined to benefit them. In large part, this is a classic example of supply and demand. Five years ago, there were more than 7,500 single family homes on the market for sale in the ten-county region. As of this morning, there were 967. This 87% decrease in available supply has, obviously, been exacerbated by the many ravages of COVID and sellers are the sole beneficiaries.
The manifest realities of this lack of inventory are stunning. In the past few weeks, my clients have enjoyed bidding wars and profits that would impress even the most jaded bitcoin day trader. I’ve worked with sellers who listed for $349,000 and sold for an eye-popping $442,000! Clients who were hoping to sell for $400,000 this past fall, benefited from their delay and sold for an astonishing $507,000! Another friend listed for $310,000 and sold for an impressive $387,000! All of these contracts were negotiated without inspections and sold without any financing contingency.
There are dozens of other fascinating stories about the magic of bidding wars and these tales have many things in common. However, it seems that the greatest differentiator between success and failure in this market is a realistic sense of and willingness to list a home for a reasonable price. Prospective sellers would be wise to consider Daedalus’ counsel to his son about the perils of flying too high in the firmament. Buyers have resigned themselves to the fact that they are going to have to compete in a bidding war in order to successfully purchase a new home. They know that they’re going to have to pay a seemingly outrageous sum of money in order to enter the legion of tax-paying citizens. However, they have no tolerance to begin the bidding process on a property that they already construe to be overpriced. Their perspective seems to be one in which they’d rather allow Icarus to crash and burn rather than assist him and his brethren in their pursuit of higher and loftier valuations. Thankfully, a property that has gotten too far ahead of the market and has been listed for too lofty a sum will ultimately sell once a correction has been made. However, it may take some time.
It’s not commonly known, however, in the tale of Icarus, Daedalus also cautions his son about the perils of complacency. This second paternal admonition may help to inform the behavior of those who are thinking about selling their home. The conditions that are delighting today’s home sellers are, most likely, fleeting. I’ve been speculating that, as warmer weather begins to take hold, as more Americans are vaccinated against COVID and as we march closer toward herd immunity more homeowners will be willing to list their property for sale. Just last week Harris released a poll showing that one in five homeowners plan on selling in the coming year. Twenty percent! That’s an incredible statistic. As a greater number of these houses are listed, it will become increasingly difficult for prospective sellers to enjoy the dizzying heights that are the stuff of today’s celebratory dinners. In other words, you may want to act quickly or risk entering the market just as others are feeling compelled to do the same. Not sure where you’d go? We’ve got a few strategies that have benefited our clients and we’d love to share them with you. I may not possess the millennial-enduring sagacity of Daedalus, however, I’m certain that I can help you with your current real estate-related queries!