Market Update December 2nd, 2024

The contract ratio for all areas and property types has fallen below 30, indicating a notable cooling in the real estate market. Currently, at 29.6, this is the lowest contract ratio recorded since April 2009, a period marked by significant market challenges. This sharp decline highlights a shift in buyer behavior and demand, suggesting that economic conditions or buyer confidence are impacting the pace of property transactions.

With a contract ratio this low, the market is officially classified as cold. A cold market typically reflects sluggish buyer activity and increased competition among sellers. This shift often results in properties staying on the market longer and sellers needing to adjust their strategies to attract interest. Buyers, on the other hand, may find themselves in a stronger negotiating position, with more options available and less urgency to make decisions.

As the pool of active buyers shrinks, downward pressure on home prices is beginning to build. Sellers are responding by making efforts to stand out, including pricing adjustments or offering incentives. These tactics aim to appeal to a limited number of motivated buyers who remain in the market. This pressure could lead to further softening in home prices, especially in areas or property types where supply exceeds demand.

Overall, the declining contract ratio and emerging price pressures suggest a pivotal moment for the housing market. Sellers must adapt to the changing dynamics, while buyers have an opportunity to navigate a less competitive environment. As conditions evolve, both parties will need to remain informed and strategic to achieve their real estate goals in this challenging market landscape.

"In three words I can sum up everything I've learned about life: It goes on."
— Robert Frost

Have a great week everyone!