Front-Line Views of the Rally

Posted by Dave Fratello on Thursday, March 11th, 2010 at 4:42am.

A capsule history of the last few years of the local RE market might go something like this:
  • 2006: Market turns strange
  • 2007: Little rally peters out, downtrends take hold
  • 2008: Sales volume bottoms, price drops get serious
  • 2009: Horrid start, interesting ending
That brings us to 2010, which by any fair account has begun with a burst of optimism. 

As MBC has noted several times, it's not unusual to see homes selling in less than 30 days – at several price points. That feels new. (Or old, more like the bubble years.) We've even shared our surprise over the fact that some of the sales seemed to come on homes that were not particularly well-priced. (See "Spring's Intriguing Signs.")

You get regular updates here at MBC on which homes are selling and where. (Blake Roberts has his own new post on the past 30 days' sales activity.) But here we haven't yet offered much opinion on what's driving the sales activity, or what might extend this little rally, or put it at risk. 

We decided to ask a selection of local RE pros to give us their sense of things in MB this Spring. Below you'll see their replies. There are several points of agreement, some divergent views and some questions about what's next.

One note: The agents who replied did so knowing we would not be naming them – for better or worse, that's MBC's policy – and we offered no promise as to how much or how little of their remarks we would use. Even so, almost everyone we asked replied, and did so thoughtfully, for which your blog author is thankful. 

Also: Two quotes in the "state of the market" list below came from outside sources, which are noted.

Now check out what the folks in the industry say, and then let us know: What's your take?


STATE OF THE MARKET

  • "[T]here is definite momentum in the market right now. I would not go as far as saying it is on fire, but certainly has some heat."
  • "Personally I think this is a dicey market."
  • "[S]ales have been painfully hot over the last 30 days." (blog post)
  • "Market is robust right now, many buyers and limited product."
  • "Folks the lights are back on for real estate in the south bay. Low inventory is causing multiple offers and buyers are back." (agent Tweet)
  • "[Th]is is all about perception... this could be a short term 'bump' in the upward direction."
  • "[I]nformed buyers realize that now is a good time to buy. Prices have corrected anywhere from 25%-35% and rates are low with 4.5% conforming and 5.5% non conforming."
  • "[I]t is what I have been saying for months, the market bottomed out last year in 1st quarter and has been bouncing back since then."
  • "I think the market has stabilized."

ANECDOTAL EVIDENCE

  • "I am actually having agents ask me when I will be looking at offers [on new listings]. That stopped in 2007."
  • "The talk in office meetings, open houses, networking meetings, and in the car is that there are good solid qualified buyers out there looking for product."
  • "I'm seeing properties priced above comps in many instances and selling with multiple offers."
  • "[M]ultiple offers on many homes and buyers that don’t step up lose. 18 months ago that didn’t happen."
  • "[A]ppraisers are no longer characterizing property valuation within a 'declining market' context."
  • "I know a few agents are asking that the appraisal contingency be removed and some buyers are agreeing.  I am counseling my clients to not remove the appraisal contingency no matter how much they like the house."

WHAT'S DRIVING THE EARLY-2010 ACTIVITY?

  • "I think lack of inventory and fear about rising interest rates is a big factor."
  • "a backlog of buyers"
  • "Buyers on the sidelines for the last couple years, waiting for the ‘bottom’ or just being conservative."
  • "‘If this isn’t the bottom, then we are close and don’t want to miss it’ mentality."
  • "Sellers that are on the market seem to be more in line with pricing homes where buyers are willing to offer. You can see that in the short days on market for many new listings that are quickly in escrow."
  • "In Manhattan, if the property is good (i.e., priced 'right', location, shows well), it's gone."
  • "[F]ear and bad news eventually pass and the markets begin to move again."
  • "[This is] normally the buying season. Last couple of years have been up in the air – all bets were off."
  • "The fact that buyers and agents are complaining daily about the lack of inventory is slowly changing the buyers' mindset and their willingness to step up and pay close to full price for fairly priced homes."

PRICE TRENDS
 
  • "Prices appear to be bouncing along the bottom, consumer confidence is up a bit, and there are some fabulous opportunities."
  • "[S]ome sale prices that appear to be higher than they would have sold for in late 2008 or early 2009 when the market was at its weakest point."
  • "Prices are moving up at many price points."
  • "I don't necessarily think that prices are starting to go up, but, conversely, I don't think they are dropping."
  • "I don't see major declines but I do expect to see another 5%-10% by the end of the year.   I just don't believe the market has reached bottom yet."
  • "I think it is good to buy now, try to get a 10% reduction from listing price if possible in order to have a safety net for ... [a] 10% possible reduction this year."

A FEW OPINIONS ON WHAT'S NEXT

  • "My prediction is that things will continue to hum along at a nice clip until late summer, and we may see a little drag depending on news on interest rates."
  • "[T]his will most likely be what I call a 'flat line' year, as we transition, hopefully, towards upward price movement as available inventory continues to drop."
  • "The question remains, will this inventory balance stay where it is at, will an increase in interest drive more buyers to the market in fear of high rates, or will higher rates stop the market because of affordability?"

So, again, what do you see, think or expect?
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