How to Prepare as a Seller in a Low Inventory Environment

The Weekly Recap

Good morning! Homebuilder confidence continues to be on the rise, the S&P 500 and Dow Jones keep closing at record highs. The US economy grew at a pace of 3.4% last quarter. The MTA has approved the congestion pricing plan for NYC. Sam Bankman-Fried was sentenced to 25 years in prison. Boeing’s CEO is stepping down. The Francis Scott Key Bridge in Maryland collapsed after a cargo ship rammed into it where a disruption in the global supply chain can cost over $80B and you can soon buy Krispy Kreme donuts at McDonald’s for a 6000 calorie meal.

How to Prepare as a Seller in a Low Inventory Environment

As activity increases week over week and we get closer to the impending almighty rate cuts, sellers are starting to make the move to listing their home. We’ve seen supply increase almost 45% in the past month in NYC and homes that are priced correctly are entering contract within two weeks! There is still more pent up buyer demand than there is good available inventory on the market. With these conditions, as a seller you’re primed for a few things and here are some things to keep in mind before listing.

Pricing- The number one reason why a home will sit on the market is because of pricing. If you are priced correctly your home will move within 30-45 days of being on the market. Understanding how your home competes in the current market environment is super important in making sure that your pricing strategy aligns within an apples to apples comparison of similar homes. We can never understand the psychology of a seller of another home but we can draw strong inferences as to days on market, their list price and their contract price. In several deals recently, we’ve entered bidding wars where deals have gone 3-7% over asking.

Future Inventory- I continue to maintain that we will see the supply of new buyers outpace the supply of new inventory coming to the market. With that said the increase in supply we are seeing is due to the cyclical change of seasons where Spring brings more listings. We will definitely see more inventory come onto the market over the next few months but wont see a real ramp up until the end of the year when rates have dropped at least twice and sellers feel comfortable selling in the same higher rate market that they would then need to then purchase in. Which then leads to the next question…

When to List- This is completely up to you and where your cost/benefit analysis for your particular situation comes into play. Getting into a marketplace where buyers are starving for new inventory is incredibly advantageous. You get to, within reason, set the market. You are competing against fewer listings and have the attention of more buyers. If waiting to list 3/6/9 months, the attention of the buyer is bifurcated in an environment with rapidly increasing levels of inventory.

Mindset of the Buyer- Buyers are MOTIVATED, especially those that have been sidelined the last two years by high interest rates. Renters are anxious to become first time homebuyers and first time homebuyers from 5 years ago are looking to upgrade their assets into bigger assets. They know that competition is fierce and that if they want a unit that is new to the market that they have to be aggressive and get it.

Market Performance

Here are how some other indexes and asset classes have performed as of THURSDAY’s opening bell. Markets are closed today.

NYC Market Update

Here is a view of new inventory that has come onto the NYC market over the past week as well as newly signed contracts in Manhattan. Big increase in signed contracts!

Mortgage Rate Update

Mortgage rates moved lower again this week. Encouraging data released on existing home sales reflects improving inventory. Rates do remain elevated as markets continue to watch for signs of cooling inflation, hoping that rates will come down further.

News You Can Use

• NYC Congestion Pricing Wins Key Approval from Transit Board Bloomberg

• NYC Sees Millionaire Population Soar 48% Over 10 Years The Hill

• The S&P 500 Just Turned In Its Best First Quarter Since 2019 CNN

• US Economic Growth Was Revised Up to a Healthy 3.4% Last Quarter Yahoo Finance

• Goldman’s Hedge-Fund Clients Get More Active in Crypto Options Bloomberg

• The Global IPO Market Just Hit It’s Inflection Point Axios

• Housing-Bond Sales Hit 10 Year High Bloomberg

• Quiet Luxury Has Now Hit the Travel Industry CNBC

• Sam Bankman-Fried is Sentenced to 25 Years in Prison Over FTX Collapse Bloomberg

• McDonald’s to Sell Krispy Kreme Doughnuts Nationwide by End of 2026 CNBC

• Boeing CEO to Step Down in Overhaul Sparked by Safety Crisis Bloomberg

The Deep Insight

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