From a Strong Sellers’ Market to a More Typical Sellers’ Market
One of the most notable things about our latest analysis of market data was that the number of new listings at the end of August has almost doubled from the same time last year – from 3,582 in August ’21, to 6,939 this past August (see stats below). Although inventory has been significantly on the rise, we are still shy of the inventory we would need to shift into a buyer’s market. It appears we seem to be moving toward a more balanced market and that we’re currently experiencing a more “typical” seller’s market.
Still, sellers seem reluctant to list right now because of uncertainty in the market. With rising rates, inflation at a forty-year high, a recession, the war in Ukraine, and the midterm elections coming up, who can blame them?! There are a lot of excuses not to sell if you need one. However, if you are a potential seller, keep in mind that prices are still up about 7% from this time last year. Not only are prices still up, but many homeowners are sitting on hundreds of thousands in equity thanks to the unprecedented home appreciation from the last few frenzied years of the extreme seller’s market.
If you do decide to sell, it’s important to remember that things have shifted. Homes selling for a premium is now the exception and no longer the norm. Just because your neighbors sold their house for tens of thousands of dollars above asking not too long ago in the spring, does not mean the same will happen to you. The average premium for homes is down about 3% from last year. Most homes are now selling near the asking price. Overpriced homes sit on the market longer, usually end up with major price cuts, and lose the upper hand in negotiations. It’s important to have an experienced agent who can create the best strategy to get your home sold for top dollar in this shifting market.
Opportunity Awaits for Buyers While Many Buyers Decide to Wait
Just like with sellers, there are many buyers who are looking to pause their home searches and try to time the market just right. Due to the rise in inventory, many potential buyers feel like the real estate market must inevitably be heading for a crash and thus plan to wait on buying.
Another reason buyers plan to wait is due to the rising mortgage interest rates – many have decided to sit things out until the rates go down. It’s important to keep in mind that there’s a lot more room for rates to increase rather than decrease. In fact, rates took a small dip recently, only to shoot back up. Rates this year reached the highest they had been since the Great Recession. You can see from the below F.R.E.D. chart that rates are still well below their peak back in 1981, where rates were averaging 16%.
Additionally, people cite higher foreclosure rates as evidence that a crash is imminent and is one more reason buyers are deciding to wait. Although the news says foreclosures are, “up 150% from last year!” you can see from the chart below that this rise in “negative equity” is low compared with the last recession. Today, people can generally afford their mortgages due to low unemployment and tighter lending standards.
Because of these factors, homes are not moving as quickly. The average days on market at the end of August was 19 days, up from 11 days this time last year. While many buyers sit on the sidelines trying to time the market perfectly, there’s much to take advantage of if you can buy now. Sellers with overpriced homes are panicking and cutting prices sometimes more than needed. Additionally, many sellers are offering incentives such as seller concessions to get their home sold. There are also more homes to choose from and more time to make the right decision for you!
The real estate market is constantly changing. The best time to make a move will always depend on your unique situation. Don’t hesitate to reach out – we’d love to help you achieve your real estate goals whether in the present or in the future.
*We use reasonable efforts to include accurate and up-to-date information. The real estate market changes often. We make no guarantees of future real estate performance and assume no liability for any errors or omissions in the content.
As always, feel free to contact us if you have questions or are interested in making a move.