Domain Market Resting
With the most recent TRAFFIC auction not performing up to my expectations considering the quality of the domain names at auction, I think the premium domain sales market is taking a temporary breather. Sellers still have high expectations for their domain names and buyers are reluctant to pay those prices, causing a stalemate. While there are still areas of growth persevering in niche markets, the overall market is resting.
Previously, domain owners could expect their premium domain names would sell for anywhere from wholesale to end-user prices at an industry conference live auction, but that hasn’t been the case for the past two main industry events. In many cases, buyers aren’t willing to pay the premium asking prices right now, and the sellers are reluctant to lower their reserve prices, causing a stalemate in the market. While this might be a cause for concern for those who are heavily invested in domain names, it could develop into a good buying opportunity, so liquidity is important.
While $10 million in domain sales in less than 30 days at the recent DomainFest and TRAFFIC auctions would seem indicative of a strong market, the names that were offered should have sold for much more (at least in my opinion). Whether domain buyers are worried about the looming/current US recession, credit fears, domain litigation/regulation, or something else, the market doesn’t appear as strong as it was before. Don’t get me wrong, the market is still relatively strong compared to many other types of investment vehicles, but I think we are in a slow down.
At the moment, the market reminds me of the New York City real estate market. I am not an expert in real estate, but from what I’ve seen and heard, sellers are reluctant to lower their prices and buyers aren’t actively buying new apartments. This is causing a slow down in real estate sales. While the market still appears to be headed higher due to record sales at the very high end of the apartment spectrum, there isn’t as much action in the middle-valued properties. People are still buying the smaller one bedrooms since those are the most economical, but the middle-priced apartments aren’t moving as well. Two years ago, if you saw an apartment you liked, you needed to make an offer ASAP at either the asking price or higher in some cases. Today, you have more time to contemplate a purchase.
Nobody would call the New York real estate market weak, but it is simply not as strong as it was. This is how I would describe the domain market at this moment, and with a swath of upcoming domain auctions, this will probably become even more evident. At the moment, I am still buying names for development, which is why I think liquidity is key.
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