What’s up, everybody? Welcome to Around The Block in Annapolis. I’m Brendan Spear with Caprika Realty
and this is our debut episode.
One of the big questions I run into a lot has been is it a buyer’s market, is it a seller’s market, what’s going on? So I just wanted to take a few minutes for our debut episode to talk about the new normal. I’ll preface with saying a few weeks ago, I was in California with about 6,000 other top real estate agents, and this was a huge topic because there’s some funny stuff that’s going on right now in the market. Basically in a nut shell, what we’re seeing is that things are starting to slow down just a little bit. Now I don’t wanna freak you out, I’m not telling you that the market’s gonna explode or blow up or anything, this is not like it was in 2007 and 2008 that everything came to a crash. Now there are a lot of smart people that do think in 2020, 2021, that the economy may have a slow cycle, maybe a mini recession, something. I’m not trying to be all gloom and doom here, but it may slow down just a hair, but not a housing crisis. I wanna repeat, I’m not saying that there’s gonna be a housing crisis. I could be wrong, but that’s not what our expectations are.
What is our expectation? Well, the first thing is what we’re noticing is that you’re medium and slightly, a little bit more expensive places are starting to slow down just a hair. Now, they’re still selling, it’s just that they might not be flying off, you don’t put a for sale sign and have it gone two seconds later. We’re starting to see that the standing inventory is starting to tick up just a little bit, and my expectation is that that will continue to rise a little bit. Now what do I mean by standing inventory?
It’s a fancy way of saying if we stop putting the houses on the market, how long will it take all the buyers to scoop them up? For several years, in the more affordable stuff, we’ve been closer to a two month standing inventory. In other words, things are moving fast and it was a seller’s market on your lower priced stuff. Now on our higher priced stuff, your 800, 900, mil plus, at least in the Annapolis area and surrounding areas, there was a bit sitting still. They’ve been pretty slow. They still sell, but it has to be pretty spectacular, and those guys, a lot of ’em just aren’t moving their prices down anymore than they’re going to and they’re just gonna wait it out because they can, and that’s fine. But your more affordable stuff has been moving pretty fast the last several years, so much so that I would say probably say 85% of my buyers have been in a multiple offer scenario. But what we’re seeing is our 400, our 500, our 600, some of that stuff, if it’s not a really great value proposition, is starting to sit a little bit. Now again, not all gloom and doom here, just trying to say that things are slowing up just a hair. Now over the next 18 months, my expectation is that we’re gonna go more towards a six-month standing inventory. The funny thing is, that’s not bad. Pre-2004 that’s how it basically was in a normalized market.
The problem is most agents in the market around here have not been in the industry long enough to appreciate what a normal market is. So they’re starting to get a little scared. That’s okay, we just might have to do a price reduction or we might have to switch up the marketing, maybe change the pictures around, do a different kind of open house, change some things up, that’s okay.
Again, you just have to have the right expectations and the right marketing plan and the right prep if you’re going to sell a house. If you’re trying to buy a house, the good thing is as things normalize, maybe it won’t be as crazy in terms of competition. Maybe you’ll have an extra second to think about what the numbers are, so on and so forth. Right now, again, things are still moving pretty fast at certain price points, so you gotta take this information with a grain of salt ’cause everything does depend on the price point that we’re talking here, okay? The takeaway is market of extremes, everybody has access to all the information. You probably have five phones on your, five phones on your app, five apps on your phone, from Zillow to Trulia to Realtor.com, et cetera. Everybody knows every single house that hits the market in the target area, so you have to look good and you have to be a good value proposition. So expect us to be in the new normal. One other little quick tip on that is interest rates. Look, the rates have been basically effectively low since the early 2000s. I had initially had to deal with trying to counterbalance the dot com crash. Then in 2004 to 2008, they were held down too low, and things really shot up. One of the reasons, not just interest rates, but a lot of the creative financing out there really amplified the boom. Then once the market crashed, we had to lower the rates more in order to jumpstart the economy. Well, the economy is doing better than it was overall over the last few years, and the housing market’s recovered for the most part. Because of that, we’re slowly starting to increase the rates. Again, I’m not saying that we’re gonna go to 10% or 15% tomorrow, but the expectation is that 5% to 6% over the next couple of years is probably realistic. A lot of stuff’s been around four, four and a half lately, so I expect things to move up just a hair, not anything crazy, but this does affect, people who are pinching their pennies to get in, some of your first-time home buyers, it will affect them. So just know things are gonna be changing, okay? That’s the new normal, that’s kinda what’s going on.
Thanks again for watching our first episode of Around The Block in Annapolis. I’m gonna be going around talking to local businesses, I’m gonna be giving you some market updates, gonna give you some stats, it’s gonna be fun. If you have any suggestions of what you wanna hear, please leave it in the comments below. If there’s any businesses that you think I should go and interview or talk to, please send me a message or leave a comment below as well. I look forward to engaging with you guys and talking to you, and if you haven’t already, please join us in the Caprika Community, it’s a closed Facebook group where we’re gonna be sharing these videos, as well as a lot of other stuff.
Again, thanks for watching, and I will connect with you soon.