Jim Valentine on Real Estate
Yes, we have been seeing downward adjustments in asking prices. The real question is how far and where do they stack up relative to the actual market. Remember, many sellers were testing the market looking for that grand slam price they heard of others getting.
If the market was at a faux high, are the current reductions a falling market, or simply price adjustments to reflect reality? For the most part, we think so. This belief is based on the offer activity we have seen lately. One example was a property originally listed at $1.15 million. It was admittedly an ambitious price, but the sellers had time and wanted to try it. The market spoke and we reduced it $100,000. That generated two offers, one at $985,000 and one at $1.05 billion. Both wanted the property badly, one wrote full price, but not over. The other might have been shopping, but was supposed to be under a time deadline.
Another situation involved a building lot. Priced fairly in a nice subdivision, we received an offer 20% under market. In this day and age? Really? The sellers made a counteroffer with a surprising nominal price reduction to what is really a market price, a 2% reduction. This is still pending an outcome at this time.
A third situation is yet another market segment, commercial property: Received an offer about 10% under asking, which was already $100,000 below the original list price. The seller was not inclined to accept or counter in that situation, it was at a price as low as he would go. Then another buyer appeared unexpectedly and is much more respectful of the price and looking for the ownership benefits the property affords him. That, too, is in the works, but it shows the activity in the market.
Buyers may think they can test the market, but sellers are generally in a stronger position than they were during what started as a price adjustment in 2008. It wasn’t long and that market dropped 70%. These times are not those times.
Prices are holding fairly well after the fluff is taken out. There is good demand and it appears as if that will be sustained due to the totality of the demand and the scarcity of inventory in the Northern Nevada region. We never caught up from the many homes that went unbuilt during the construction pause of the last recession, but demand has increased from pent up demand and from the population shift effect of those leaving our neighbor to the West. Add to that the radical increase in materials, scarcity of skilled labor, and the slow downs from COVID-19 and the Great Smoke Out of 2021.
There are factors hovering that can have an impact on our market including inflation, 2022 being an election year, and COVID-19 mandate and policy fluctuation. Inflation is of the utmost concern as it can directly impact the wonderful interest rates we’ve enjoyed for an extended period of time. As interest rates go up the buying power of individuals goes down. Inflation also negatively impacts household cash flow resulting in less discretionary income to spend on a home thus limiting their borrowing amount.
We are in interesting times as people test the market. The best thing you can do as a buyer and a seller is to determine what it is you want in a home. Once you’ve established your wants and needs you can decide if it is time to buy or sell. If it is, don’t try to time the market, that is like catching a falling knife. Make the best deal you can and look forward to the positive benefits of your transaction. Whether you sell and get to make your move, or have bought what you want and settle in to enjoy it, make your move with confidence as there is still a strong, viable real estate market in Northern Nevada.
Listen to your heart and go with your intuition. Rationalizing your transaction with facts, or opinions of others that don’t know all your feelings, wants and needs, will only serve to enhance your frustration factor.
When it comes to choosing professionals to assist you with your Real Estate needs… Experience is Priceless! Jim Valentine, RE/MAX Realty Affiliates, 775-781-3704. firstname.lastname@example.org