What are the leading indicators of the slowdown in Real Estate?
Larger inventory?
Longer time in market?
Shrinking difference in list vs sold price
I am in the market currently as buyer and don’t want to be the person buying just before the peak. I know RE is a long term investment or house is a lifestyle decision etc etc. but from your experience what are the leading signs of real estate slowdown.
I say just before the peak because I think bay area RE has seen significant gains in last few years and I expect lots of people to flood the market as seller (to realize their gains) once they realize it’s slowing down and may come down. I would have done that if I am sitting on $300k-$400K worth of gains.
Leading indicator of a housing price drop is inventory increases. They would have to increase ten times current levels. The other is a stock crash and increase in unemployment.
When these happen most will be too scared to buy. And others will not have the means.
Yup, and it’s days of inventory that matters. I still think the real leading indicator is job growth though. If there’s job growth, then more people will be working and buying homes. If companies slow/stop hiring, then you’ll see a slowdown in real estate.
I have been watching the Redwood City market for 25 years. The current active inventory is 44 . Most are on less than 2 weeks. Very much an extreme sellers market.
A balanced market would be 250 sfhs. A buyers market would be 500 active and 6 months inventory. Never have seen that even during the recession.
121 Springdale is on again at $2.5m. Been on and off the last four years. From $2-2.5m
Seller has no clue to the value. Low ball him and grind him.
I don’t know if the concept of a balanced market has ever existed here. We should have a new bay area specific metric on balanced market since that’s probably going to be more relevant. The tricky part is how to determine this. 2 weeks? 4 weeks supply? 2 months? Certainly not 6 months like the norm for flyover states.
