Boston high rise condo Sellers – Panic?
I’m all for being on the lookout for seller panic.
What are the two simple signs of panic?
- New listings flooding the market.
- Many homes selling for radical discounts below recent comps.
Those are the two most obvious signs of seller panic. Comparing the YoY percentage of active listings is interesting, but doesn’t tell us enough.:
What aren’t signs of panic:
- A growing inventory of unsold high rise condos
- More price reductions.
We are going to get comfortable with a larger inventory of high rise condos for sale. The more unsold Boston luxury condos lying around means that sellers aren’t very motivated, because they didn’t price aggressively in the beginning and they still think their price must be right.
On #2, more price reductions don’t tell you much. However, most price reductions aren’t lopping off big chunks – they are usually 1% or 2% off, which are too small to change anything and they will have to keep doing more. By the time they knock off 5% to 10% from their original and overly-optimistic list price, they will feel like they are giving it away and change course (rent it, reverse-mortgage it, or wait until next year).
Could there be sellers motivated enough to dump on price? Very unlikely.
Let’s consider the sellers who might be motivated – the Big Three:
Death – for those who inherit, this is their lottery. Not only will they hold out for crazy money, but one of them could probably use a residence so there are other alternatives to giving it away.
Divorce – what was once 100% equity is now 50%, and each spouse will want/need every dollar to split between them. If they can’t sell for enough to make everyone happy, well then everyone has to live somewhere. One of the spouses could occupy until the market ‘improves’.
Job Transfer – renting instead of selling is always an option, especially for those who think they might want to return some day.
Sellers who aren’t in the Big Three categories are definitely not going to give it away, so the worst that will happen is a slight downward trend in pricing.