Driven by high demand and calculated pricing for bidding wars, 25 Montclair homes closed in April averaging a record 32% over asking price. Not only that, but those 25 homes closed with a record low 15 average days on market.
Core Lesson for Sellers in this Market
Looking at the above table highlighting how much above asking price buyers are willing to go in this market, the main takeaway is that sellers can’t really price too low. Buyers will extend themselves for the right house (and the right houses seem to be in the 3000sf 5Br 3 ½ bath range).
Do these numbers reflect outliers well above the next closest offer?
Typically not, as offers 15-20% above ask find themselves in the bottom half of offers received in the popular prices bands.
Stagflation and Where Do Prices Go From Here?
We’re currently experiencing a stagflation in real estate, high prices and low volume. Despite the high prices, there were only 90 active listings in April versus 122 last year and 185 in 2019 (typical precovid numbers).
Despite rising interest rates, I don’t see prices dropping anytime soon, but leveling out.
Other asset classes (stocks and bonds) just aren’t that attractive now and housing is an asset you can live in. Rents are rising, so ROI on investment properties should remain healthy, depending on financing costs.
Broader stagflation shouldn’t greatly affect housing prices.
The Purchase Managers Index is down, supply chains have been plagued by Covid and Russia, but unemployment remains low and consumers are sitting on decent savings and equity.
If consumers pull back on spending, forgoing travel and vacations, they will still want a comfortable home to enjoy. The sustained trend toward flexible work from home doesn’t bode well for commercial office space, but should continue to fuel residential demand, especially in suburban markets.
Contact me to find out more and get your questions answered.
3rd Generation Owner