How Sellers Might Find Opportunities in the Current Housing Market
As the CEO and co-founder of a real estate company that helps property owners list and sell their homes, I’ve kept an eye on market trends and want to share this insight with a few items to keep in mind — whether you’re planning on selling your home soon or just thinking ahead. US News and World Report said in early August, “Housing demand, housing supply, mortgage interest rates, and unemployment all play a role in how the real estate market fares, and currently they indicate a period of slowed growth, not decline — and certainly not significant decline as seen in the housing market crash of 2008-2009.” Home prices are still above where they were a year ago, so if you’ve owned your home for more than a year, you may still be able to sell at a profit.
Anyone paying attention to real estate knows that the housing market has cooled considerably in recent months due to markedly higher interest rates. But for potential home sellers, it’s not all bad news. As homeowners think about parting with their largest asset, it’s worth taking a holistic view of the market, beyond just mortgage rates.
A Housing Correction Isn’t a Housing Crash
Despite the recent correction of a formerly hot seller’s market, forecasters do not predict a major housing crash as in 2008.
US News and World Report said in early August, “Housing demand, housing supply, mortgage interest rates, and unemployment all play a role in how the real estate market fares, and currently they indicate a period of slowed growth, not decline — and certainly not significant decline as seen in the housing market crash of 2008-2009.”
While home prices are decreasing from their highs, they are still retaining value. For example, a Department of Commerce report (July) shows that while new home sales are down, prices remain high. There is still a lack of supply in many markets, and that will continue to drive strong prices. Home prices are still above where they were a year ago, so if you’ve owned your home for more than a year, you may still be able to sell at a profit.
According to the RE/MAX National Housing Report, in July 2022, “the median of all 53 metro area Sales Prices was $415,000, down 2.9% compared to June 2022, and up 8.1% from July 2021.
“In other words, sellers are still coming out ahead, even if they missed the market peak.
Sellers Need To Be Strategic About Pricing and Property Condition
Don’t let emotions guide your pricing decision. You have memories and attachments to your home that a buyer doesn’t, and you can’t price based on what your neighbor nabbed during the recent spring fever. Today is a different market in some ways and buyers will likely be looking more closely at comps, interest rates, and monthly payments.
Most experts will tell you that it’s better to slightly underprice your home than to price too high. An attractive price means you may end up with a bidding war, while even a small overprice can keep buyers from even looking at the home.
And since the market is always fluctuating, you should do a comparative market analysis (CMA) or hire a company. Sites like Zillow, Trulia.com or StreetEasy allow you to search comparable homes that were recently sold in your area to give you a better idea of what is happening in your local market.
When you are evaluating home prices, remember that a home’s list price is not what CMAs or appraisals look at. These analyses look only at the actual selling price of a home. Homes that are in contract won’t publish the selling price until after the close, so the price listed on a pending home may not be correct.
Also, consider hiring an inspector before you list. Buyers who are backing out of contracts — which is happening more often now in different markets — are doing so largely because of surprises during inspections. They simply aren’t willing to swallow higher interest rates and an aging HVAC system or a potentially leaking roof. It’s better for you to know what your weaknesses are before the buyer does, so you can either price accordingly or fix the problems first.
Finally, market conditions can vary widely depending on where you live and what is nearby. The rise in remote work shifted demand from large cities to smaller metro areas in many states, but recent data shows those trends are starting to reverse a little