Buyers have held the cards in the real estate game here since 2008, but a slow switch to a sellers’ market began last year and is taking on steam.
The buyers’ market is “probably coming to an end in the foreseeable future,” according to Lylla Carter and Krae Van Sickle, a team at Saunders. The good news for buyers is that for the moment at least the scales are still tipped in their favor, with low interest rates, high inventory, and approachable prices. However, conditions can change with the speed of a Gulfstream V, so Ms. Carter and Mr. Van Sickle have a warning for buyers: The time to act is now.
“We are moving through a rapid transition,” said Chris Chapin of the Lord-Chapin team at Douglas Elliman. “This place is so small and geographically constrained that it takes very few additional buyers to tip the whole dynamic into a sellers’ market. The same thing has been happening in the San Francisco peninsula and in Manhattan, he said.
A look at the number of houses available is one indication that the market is generally on the upswing. Over recent weekends, when the weather has not been a deterrent, “We’ve been running from pillar to post,” Mr. Chapin said. Last weekend, he said, “Saturday was our busiest day for new customers in over a decade. . . . We received three different calls from the 917 area code within an hour. All new buyers. And we kept getting new buyer inquiries via email from Zillow, Trulia, and Douglas Elliman sites. It’s like spinning plates, just when I think I have my day planned, there’s another call. He said he’s had to push his workouts back to 7 a.m.
And apparently these are not window shoppers. They are buying, said Brian Blekicki, a member of the Lord-Chapin team who worked with clients in Sag Harbor on Sunday. “When I was setting the itinerary, it turned out that a quarter of the houses that I had planned to show had accepted offers, or were even in contract.”
The inventory appears to be shrinking. “New listings are not keeping pace with the number of purchases,” Mr. Van Sickle said. Ms. Carter agreed, saying she was “struggling to find inventory” to suit buyers’ needs.
Bruce Pellman of Brown Harris Stevens took a look at the inventory over the last five years. “We were glutted with it. If people needed to sell they were giving it away because there was so much competition. We’re more bullish for 2014.”
The overall economic picture is also playing a role. “There are a lot of wealthy people here who have been capable of purchasing, who now feel secure . . . who now seem willing to buy,” Mr. Van Sickle said. There is also a fair number of investors scooping up multiple properties, according to Mr. Chapin.
Some say another reason buyers should reel in their lines now is that interest rates are expected to rise. Mr. Van Sickle does not believe that will affect the market as a whole, however. He has found that with strong demand, higher rates do not stop buyers from purchasing. But, he said, “It makes it difficult for buyers to get the caliber of property they want.”
At any rate — at least at the high end — interest rates are irrelevant. “We’re dealing with an affluent buyer . . . many buying in cash,” Ms. Carter said.
Though most real estate pros are predicting an imminent sellers’ market, Mr. Van Sickle said “what’s unknown is the velocity, how fast will it happen.”
Despite an increase in transfers and a 15 percent to 20 percent decrease in inventory in 2013 over 2012, prices have not risen. The Saunders year-end market report does not show an increase in prices, which Ms. Carter and Mr. Van Sickle said was surprising. “There are micromarkets where prices are being pushed up, but they are too small to be discernible,” Mr. Van Sickle said.
So, while sellers are expected to have the upper hand, at least soon, Ms. Carter and Mr. Van Sickle caution them to not let their heads get too big. “We have observed sellers who, believing the market has turned completely in their favor, are being more cavalier than perhaps they should be,” they wrote in a recent report on 2013 results.
On the other hand, Mr. Chapin said several sellers, aware that the market is shifting, have put their ears to the ground and raised their prices. His partner Ray Lord had a buyer recently who had accepted an offer that was somewhat off the asking price. But when someone else came in at full price, the first buyer had to bid over the original ask. But all was not lost. “We got the house into contract.”