Appreciation Rate is Declining as Inventory Grows

The appreciation rate is declining now that inventory is growing. The appreciation can be measured in many different ways, but based on the monthly average $/SF, the appreciation rate for all areas & types within the ARMLS database is now below 30%, having peaked at over 39% at the end of May. Obviously the rate based on the annual average $/SF is slower to react and is now leveling off near its peak at 24.4%.

Both measures of appreciation are likely to fall further over the rest of 2021, though they are unlikely to get back down to what we could consider normal during the next 4 months. Normal would be something less than 5%. We last saw that in 2016.

Even in a seller’s market, not everything sells. ‘Anticipatory Pricing’ (pricing above ‘market value’ in anticipation of bids) will likely cost time and ironically discourage offers from those who will pay the most – and that would be the motivated buyers ‘hovering’, as it were, waiting for that next best value to hit the market; understanding they will likely have to compete for the best. Sellers achieve the highest price by Competitive Positioning – being perceived as the ‘next best value’ to the ‘hoverers’.

The market statistic remains to be local or neighborhood driven. If you would like to hear more information about your neighborhood or a particular area and/or price point of interest we are happy to do a detailed market report for you. Please call 602-320-8415 or email All.Lucky@RussLyon.com