We’re halfway through 2019, and it’s already been a whirlwind. I sort of feel like I have whiplash given all that has changed in the marketplace, and just how fast we’ve seen the shakeup. In 2016 we couldn’t keep up with the market’s demand. Properties were flying off the shelf, into the hands of highly motivated buyers. Sellers could command upwards of 10% over market value, and bidding wars were a fact of life. Where are we today? The opposite situation in so many ways.
I put together the biggest trends we’ve seen thus far, and also an outline of what we’ve learned so that we can all take a minute to reflect and gear up for the rest of 2019. I guarantee it will be a wild ride!
Shifting to buyer’s market
Most notably, we are in a shifting market place and have landed squarely in a buyer’s market here in Chicago. As a result, market time has increased substantially. Usually when we see market time increase so much the market as a whole feels sluggish and stagnant. But, because interest rates have also remained so low, we’ve seen more of a plateau than a downward trend. Basically, the high market time has been equalized by the low interest rates and we are in a holding pattern.
The other symptom of the shifting marketplace is the lack of inventory we still see in Chicago, counterbalanced by buyer’s lack of motivation. We just don’t feel the shortage like we did, even this time last year, because of this new buyer mentality.
Buyers: don’t lose focus on the big picture
Buyers are pickier than ever in our new market. They are looking for a perfect fit, and most don’t want to do any work. From their perspective, properties should be pristine--painted, latest finishes, and up-to-date everything. Sometimes selling at market value is seen as over-paying to some buyers, especially given the mentality that anything less than up-to-date needs work.
My advice to buyers is two fold: first, the market doesn’t really allow for deals. An under-market listing will generate a bidding war because there are still plenty of buyers out there. And second, because there are so many buyers, stand at the ready. There are still plenty of well-priced homes selling quickly, and you don’t want to let “the one” slip through your fingers because you weren’t ready.
Sellers: initial pricing strategy is crucial
This one is pretty simple: if you want to sell your house, you have to price it to sell, right out of the gate. There’s no room for experimentation or luck in this market. If you are motivated to sell your home, I recommend you price it at or below market value. This is literally the only way to generate the necessary sense of urgency. I know what you’re thinking, “But Julie, I’m scared to leave money on the table.” My response to this one is also simple: the market doesn’t allow for money left on the table. If a home is priced below market, buyers are going to take notice.
That is the other aspect of our current buyers to remember: they are well-educated. They’ve been bouncing around this market for months and have a very good sense of value at this point. If there’s a deal, buyers will come running and bid each other out. We just had this happen with a listing last month.
My last advice, for both buyers and sellers, is negotiate, people! I wrote this article a few months ago about this trend we are seeing with buyers and sellers not negotiating, and it is such a mistake. Read the whole thing here.
The rest of 2019: values will continue to decrease
So where do I see the rest of 2019 going? Honestly, I see more of the same. I think the buyer’s market will remain, and we will continue to see values decrease. So far this year we’ve seen values go down 1-1.5%, and by the end of the year I think we may be at 3-4%.
The hardest part of a shifting marketing is that values are a moving target. You HAVE to stay on top of the market to get anything done as a buyer or a seller. If you are serious about either, I would be looking at comparables on a regular basis to stay in the know.