It’s essential for real estate agents to understand the current marketplace so they can get the best deal for their clients. And after years of watching the market favor sellers, many agents say they’ve seen a recent shift that has affected luxury property sales across the globe: We’ve entered a buyer’s market.
Jed Garfield, president of Leslie J. Garfield & Co., a New York–based brokerage that focuses on town houses, said he saw signs of this trend in late 2015, when properties that were listed at a fair market price didn’t sell. But recently, the impact has been dramatic. For example, a town house on East 70th Street between Park and Lexington avenues that was bought for $31 million in 2013, re-listed for $32.5 million a year and a half ago—and then dropped down to $22 million three months ago.
“The market is not what it was,” Garfield said. There’s an expectation that real estate prices will rise 3% to 5% each year, he added, but buyers won’t stand for that anymore. “You’d be very hard-pressed to find anybody who would pay more than 2015 prices today,” he added.
The surprising news? Homebuilding’s impact – or a lack of it in some places – is by far and away the biggest influence when it comes to inventory woes, outweighing other explanations by a large margin. Across the 100 largest metros, our findings show that:
New home construction is strongly related to inventory. Every one percentage point increase in a market’s housing stock between 2010 and 2016 is, on average, correlated with inventory that is approximately 13% higher.
Investor ownership is tied to lower inventory. Every one percentage point increase in the housing stock owned by investors in a market is, on average, correlated with inventory that is 2.8% lower.
Older households – by hanging on to their homes – aren’t necessarily driving down inventory, at least not yet. Every one percentage point increase in the housing stock owned by those aged 55 and over is, on average, correlated with inventory that is actually 3.6% higher.
Build baby build. …been my mantra on redfin forums since 2009…Been my whole career. .I have helped build thousands of homes despite the nimby, environazi wack jobs that run all our BA cities…No more for me though…happily retired in Tahoe, will never build another new house… but will keep remodeling till I die…
Most academic research is only useful in a very narrow sense. I’m not convinced that Shiller is good at predicting stock prices or housing prices. If he’s good at it, please show me his trading record
I think he actually developed a Shiller P/E index where he demonstrated stocks were at historic highs even back in 2012. And I think perhaps that’s why he won the Nobel prize? Of course those who listened to him missed out on the gains 5 years straight. Meanwhile he pocketed his $500k prize money. What irony!
