The questions I am asked the most, especially recently, continue to be, ‘Are we in a Bubble?’ or ‘Are home prices going to crash?’. If you are a regular reader of my posts, you know the answer is NO! Not because I am an optimist (which I am), or because I want to sell your house (which I do), but because of basic economic factors of supply & demand. There are simply too many buyers, today & coming of age in future years and too few houses for them to buy. I will go into those market factors in another post but today I want to discuss the SHIFT that has happened in the market.
SHIFT HAPPENED – looking back –
The shifting winds created during the last 2 years have begun to shift again. Craving bigger spaces & able to live where they want, those who could move, DID. Trading smaller for bigger, urban for suburban or exurban, people across all spectrums of homeownership moved into new diggs. Fueled by low interest rates & changed priorities, they paid almost anything just to get under contract. While this was a good moment for those sellers who had a place to go, it actually had a negative effect on inventory by locking up sellers who could not compete as buyers and they stayed put. It also locked out first time homebuyers who could not compete with cash or cash like buyers and also kept move up & /or downsizing buyers in place. In short, low inventory coupled with too many buyers lead to multiple offers & explosive price growth.
SHIFT IS HAPPENING AGAIN – what now?
Now with prices across the US up 15% to 32% in one year & interest rates on their way to doubling in a short few months, what comes next? Locally, we are already seeing a reduction in Open House traffic, Days on Market getting longer & only a few offers instead of too many. But the market remains strong with sale prices continuing to rise & the sale vs list price ratio hovering around 100%. Properly priced homes are still moving quickly. Even improperly priced or presented homes are going Pending quickly once the price is adjusted.
As the market shifts in the Buyers favor (or at least less in the seller favor), proper pricing is key. No longer can an agent carelessly price low & expect buyers pay more as they beat each other up. With the prospect of only one good offer, sellers must be prepared to accept the price they list at. Sellers & their agents must also prepare the home properly; staging, pre-inspection repairs, sprucing up… all should be on the table.
But as I always say, sell when you need to, Buy when you need to; DO NOT try to time the market. Just hire an agent whose experience can maximize the market when you do decide to sell.