It’s June and the beginning of the “summer selling season” for real estate in Valmonte. Instead of a bunch of flowery talk about how great everything is about the market , I’m going to go out on a limb and dare to be more realistic than perpetually optimistic . The local real estate market is setting up for a price correction. The bigger question, and one I don’t have an immediate answer to, is for how long?
Let me explain. Annualized average sales prices in Valmonte have risen steadily since January of 2015 and are up nearly 50% since March 2010. In that same period, inventory has declined to our current supply levels of approximately 2.5 months supply of homes. (The chart on the following page illustrates this over the last 10 years). At the same time, the sales price compared to original list price is hovering around 99-100% of list, but that’s where the change is about to happen. As the message of tight
This exact scenario has taken place on several occasions over the last 4 years. After inventory spikes in the summers of 2014, 2016, and 2017, buyers were able to buy homes on average less than 95% of the asking price as the result of a short t erm supply glu t. In all these cases, the market returned to a seller’s market shortly after, but the short term price correction provided excellent buying opportunities for those in the market for a new home. Challenges to this model would be a sudden drop in int