Let's Play What's My Market

I was reading an article the other day that posed an interesting question about the current market. What kind of market are we in, a Buyer’s Market or a Seller’s Market?

As you know, the definition of a Buyer’s Market is one where there are more properties on the market than there are buyers willing to buy them. When a buyer makes an offer on a property, and the seller does not accept the offer, the buyer is likely to end negotiations and move on to another property because the market is perceived to be the land of plenty.

Is that true now? Are you looking for a particular property or type of property? Are you finding an abundance of properties that fit your profile? If the answer is no, then this is not a Buyer’s Market for you.

Conversely, a Seller’s Market is one where there is a large audience of eager buyers and limited inventory, resulting in multiple offers and a frenzy that inevitably drives up the final sale price. Believe it or not, this is happening in many areas of the country like California. Is it happening on Martha’s Vineyard and what is your view of the Martha’s Vineyard real estate market?

My opinion is that we are in a market we have never seen before. This is a bipolar or, dare I even say, a psychotic market. This is a market where the banks, lenders and appraisers control and determine the value and the fate of the market. This is also a market that depending upon the price line, location or circumstance can be a seller’s market, a buyer’s market, a lien-holder’s market, a lender’s market (there is a difference) or an appraiser’s market. Another facet of this market is what we call shadow inventories. There is an inventory of properties that are not on the market but available for sale if and/or when the market appears stable enough for those silent sellers to get their price. The banks are also holding inventory they have reclaimed through foreclosure, not so much on the Vineyard at this time, but to a great extent in other areas of the country. They are holding them until they feel they have a better chance to recoup their loss. Many of those properties were originally part of the ‘short sale’ inventory.

It would seem with prices and interest rates at historically low numbers first-time home buyers and trade-up home buyers would be running into the market and into the grateful open arms of eager sellers anxious to make a deal. Buyers should realize what a once in a lifetime opportunity they have to purchase the home of their dreams at today’s dollars and historically low interest rates. However, there is a pervasive sense of entitlement on both sides in today’s market that is preventing buyers and sellers from coming together.

Okay, so what is the problem? Ironically, as I am writing, I got my answer in a response to a conversation I am having with a seller agent regarding a buyer client who is interested in a couple of her listings. She says, “… both are pretty motivated...but these are not distress sales. We'll obviously consider any offer.” Who would put their property on the market today if they are not ‘motivated’ to sell? Ignoring the market data, sellers believe they are entitled to higher prices for their homes, and buyers believe they are entitled to even further discounts on homes that have already been heavily discounted. So once again, just like when we were children at our first dance; buyers will sit on one side, sellers will sit on the other side, both acquisitively looking at each other and missing the ‘last dance’.