What a Quiet Day ...

The consensus on tour was that there was very little excitement, some very nice homes listed as NEW, but overall, quiet.

A few thoughts that may help us make sense of the market:

1. Newly listed home prices still tend to be high - Sellers continue to build in extra money to their LIST price thinking they need it to negotiate down. In some manner, this hurts them because Buyers are sensitive to even the least bit of overpricing. We see many price reductions taken in the 21-30 day range. Any reduction is a signal to buyers that more cuts may be coming, thus stifling buying behavior.
2. JOB SECURITY - like the AXA TV ad, the "800 pound gorilla" in Wilmette, Winnetka and Kenilworth real estate is that many people are less secure in their jobs today than they were just a few short months ago. That insecurity has a negative effect on the real estate market - slowing bidding and purchases.
3. CREDIT - it's (still) hard to come by. Certainly there are a number of individuals who have maintained a wonderful credit record. They find financing easily. As home prices track downward, these people ready, willing and able to purchase.

I've heard many agents talk about these three themes and argue that none are operative on the North Shore. I don't agree with that and believe that we're moving towards a "new" Normal (I wholeheartedly subscribe to this concept. Read more about it and the commentary offered by PIMCO's Mohammed El-Erian.)

Part 2: Pricing:

For the past year I've thought pricing on the North Shore was based more on emotion and financial need rather than on logic and market conditions. That may be changing: two homes came on today that offer a good perspective on value.

One listed at just under $1,100,000 has 12 rooms, 5 bedrooms and 4.5 baths. It offers a great kitchen/family room set up, a master bedroom with the obligatory master bath and a third floor teen retreat. It appears to be in good shape.

A second home, very similar in almost every respect, was also listed today, at just under $970,000. The primary difference is that the more expensive home offers the newer, expanded master, master bath, new kitchen and the family room. All else is very equal.

If we accept these prices as accurate, the more expensive home may be a great deal because a new owner could not improve the lesser priced home simply to the level of the more expensive one for the $126,000 difference. That seller should be able to sell faster having created a strong Value proposition.

What I like is that we are now seeing homes with smart, functional improvements priced competitively and CREATING a value propostion that canmotivate buyers to act. For buyers, that's great. But not yet the definitive turning point. Sellers, let's watch and see which sells faster; that will provide insight as to how buyers assign value today.

DS