The market is shifting, and your clients need guidance. Here’s what UrbanDigs thinks they should know today:
1.
Sales are a lagging, rear-view mirror metric. With that in mind, agents should advise clients that while the market ebbs and flows, it is likely we will see the slowdown reflected in the data during Q3 and Q4, and beyond.
2.
Sellers enjoyed the luxury of unseasonably high deal volume for more than five quarters now, and for the first time in a while, will need to adapt to declining bid activity and bid levels. To put it in driving terms: The market was speeding along at 100 miles per hour, but will slow back down 65 — with the possibility of a lane closure ahead causing more of a slowdown.
3.
While the bid for the sales market is adjusting lower, the bid for the rental market keeps marching higher. This could help put a floor to the depth of the sales downturn, and lure investors back into sales markets. If feasible, a one-year rental, with hopes to revisit a sale in the next year or two, may serve as a solid plan B.
4.
Buyers need to be prepped now — before the slowdown takes hold. Here are two metrics that will show both the depth of downturn, and that will signal to buy later on: UrbanDigs’ Monthly Contract Activity for May came in at 1,302, and UrbanDigs Market Pulse is currently at 0.69. Both are expected to fall, and buyers should have a notable leverage advantage in the coming months.
5.
The Federal Reserve is expected to continue increasing interest rates through at least the end of the year. After that, they are expected to pause, and potentially lower rates in mid-2023 and 2024. This could act as a roadmap for a buy signal later this year.
Remember: The market is not dead! While it certainly is slowing down, it’s also just sort of settling back to a normal state after seeing a high-octane couple of years. Unique properties that offer value to buyers will have no trouble trading in this market — summer slowdown, or not. While it might not be the right time to ask for 5% more than last month, it’s also not the time to expect a lowball offer to get a response.