Last year’s trend is repeating itself right now: we slow down in June, and inventory piles up. This supply and demand chart for Menlo Park shows this trend in 2012, and again last year. Inventory has picked up dramatically as year has gone by, and it’s going to peak. This is the June swoon. People get busy and stop paying attention. Some people who didn’t quite get to the market in spring are now putting their homes up for sale – yet there’s few buyers and little attention.
Advice for listing agents: Use market pricing
Alter your pricing strategy. Be cognizant of the fact that there aren’t as many people paying attention, and they can’t be as quick on the dime. Don’t continue to use auction pricing when there are fewer buyers. Use market pricing, take offers as they come, and be very patient.
Be a little more old school in your listings: list them, give yourself some time, and take offers as they come. Don’t go try to push it.
Messaging for buyers: Now’s a good time
Re-engage your buyers who are worn out. Try to get them back in, especially the ones who are borrowing. This is their chance to buy a house without competing against 75 people. There may not be a lot of room to negotiate, but there is less competition. More inventory means choice. Now is a good time to be looking in the market, if you’re in for 5-7 years.
There are some deals to be had out there. Be alert in the summer months. Notice that prices dropped for sold homes in Menlo Park in May, June, July and August the past two summers. Last year’s summer buyers got some bargains, as there was as 5-7% drop in pricing from May to the bottom in July. If you have buyers out in this market right now, this is the time they can get some deals.
The Big Question: “Is this the end?”
Here’s what everybody wants to talk about: “Is the pattern going to take off again next year or not?” We’re going through our standard pattern, but everybody’s wondering, “Is this the end?” Buyers are nervous: “I’m going to pay the most.” Sellers are nervous, “I’m going to miss it.”
Your buyers will be nervous. They’ll start to say, “Things aren’t selling, the market’s going down.” If the pattern goes like it did the last two years, all inventory will sell at this same time – in August/September – and your clients will miss out if they don’t buy.
The Crystal Ball: We’ll rock around the top for a while
If the market continues to be strong, then we’ll see some advancement in prices next year. I think we’re now at the top, and it won’t be as aggressive as this year.
Stock market and investment traders will tell you, “when markets peak out, it’ll sit there at the top – could be a month, a year, two years . . . nobody really knows.”
The super high end in Atherton is popping big time right now. Traditionally, the high end has been a forecaster for good things because those people have companies. They know things are going well, so they’re investing money. It can be a red herring sometimes, as they’re moving money out of the stock market.
This feels to me like this market has strength, sustainable strength. Mary Meeker, the celebrated Internet analyst, doesn’t think the market is in danger of suddenly imploding the way it did in 2000. She recently pointed out that both private venture funding and public valuations of tech stocks are still well below their peak during the last tech bubble, which came to a head in 2000. I don’t think the market’s going away, either. We’ll rock around the top, maybe for the next few years.
