Been a long time for my update… apologies as we’re moving to a video format!
So where are we in the market in the 3rd quarter of 2018? Pretty much tracking along as I’ve expected and shared with many of you recently but with a few new wrinkles I just learned of this past week.
Averaged across all price bands/sectors, market supply is at 3 months which is considered a low inventory/ high appreciating environment. However we’re only seeing appreciation in one main price band and even then at about a 5% annual rate vs 7-10% we would expect at 3 months supply. For context a 6 month supply (enough inventory to meet current rate of demand averaged over last 12 mths) is an equilibrium market. In that environment you’d normally see 4-6% appreciation annually in prices.
Why isn’t appreciation higher given supply overall is 3 months?
$0-$500k we are 2 months or less, severely undersupplied. and are on track for 5-6% appreciation,
$500k-$1M we’re at about 5 months supply. More of a balanced market and 3% or so appreciation. flat on appreciation or maybe 1-2 appreciation
$1m-$3m we’re at 10 months supply, oversupplied and seeing 3-5% depreciation
above $3m new construction is undersupplied but resale (especially if older than 5 years) is above 10 months and seeing 3-5% deprecitation.