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PENT-UP BUYER DEMAND EXPLAINED

Monday, April 8, 2024   /   by Richard Eimers

PENT-UP BUYER DEMAND EXPLAINED

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By Richard Eimers April 8, 2024

This is called pent-up buyer demand and arises where a good volume of potential buyers has been ready and able to buy the properties but has not taken the buying decisions. There may be a delay decision for waiting conditions in the market when prices become cheap, betterment of financial positions, and the uncertain economy, among others. When conditions become ripe, this demand is released all at once, leading to a significant surge in sales activity.

Relating to the Spreadsheet Data: Increase in New Listings and Total Active Listings: The number of new listings and total active listings are growing in most market areas. Superficially, there may appear to be more of a supply than demand.

On the other hand, in relation to pent-up buyer demand, this could also signal expectations by sellers of an increase in buyer activity and that they list more properties in expectation of reaching normal demand. Properties Under Contract and Number of Properties Sold: These metrics provide insight into the current demand. While the sales numbers have not risen equally, more properties under contract would signal potential buyers to enter the market and, consequently, release some of their pent-up demand.

Again, if that pent-up demand is supposed to actually exist, such numbers should skyrocket once the conditions are right for buyers to pounce.

Implications for the Market:

Yet, if there is, indeed, pent-up buyer demand, then the increasing influx of listings could just as easily be absorbed quickly enough in order for the market to, at worse, stabilize prices; or if new supply exceeds usual demand, even rise, despite the larger than usual supply. This is because new demand would outstrip the new supply coming into the market.

The current high level of active and new listings infers a quickly moving marketplace, driven by pent-up demand in areas such as 30a EAST and 30a WEST. If the demand that he imagines does not materialize, then the demand-side of the equation will have more potential to over-supply the market with listings and may result in downward price pressure. In other words, while the increase in listings does not expressly speak to buyer demand, the increase in listings and dynamics of properties both contracted and sold all seem to point toward the concept of pent-up demand. If indeed it is the case that this demand starts to materialize and make its way into the market, we could well see rather a sea change in terms of sales activity and pricing in those areas that we've been discussing. Watching these trends over time are going to be very key toward the quest of trying to figure out what impact pent-up demand is having on the market.


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Beach Road Realty
Richard Eimers
17 Roundwood Drive
Inlet Beach, FL
850-259-1798

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