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Two and a half weeks ago, Nora Cresthwaite listed a home in a desirable Des Moines suburb for $275,000.
“It sold out the first day,” Crosthwaite told Iman.
A week later, Crosthwaite — an agent for Iowa Home Sweet Des Moines — listed another home in the same price range, also in a well-established suburb. It was sold in three days.
In the context of the intense competition of the past two years, these stories seem familiar, even unremarkable. High demand and low supply means homes sell quickly.
But in both of these cases, Crosthwaite saw something else going on: each house received only one offer each.
“We did a high and best deadline, and then only one came in. If both houses had gone on the market in January or February, we would have had five to 10 offers,” Crosthwaite said of the second listing.
These sales highlight a much-discussed market turnaround that has been underway for months now. But the relative lack of offers on received homes is making headlines and begging the question for potential buyers: Are we still in a seller’s market? Or have we entered a buyer’s market? And is this finally a good time to buy a home?
The short answer is that it is generally a seller’s market.
But the longer answer is that the market is more complicated, the pendulum swings faster towards buyers. At the same time, some property types or regions are performing very differently, and some industry practices that evolved during the pandemic years are returning as buyers become more leveraged. In other words, in some cases, buyers actually took the upper hand.
The seller’s market continues, but the pendulum is swinging.
It’s no secret that the market is changing, and new data in the past few days have shown that competition for homes is less, sales are falling, and the construction industry is shrinking at a rapid clip, among other things. Wave effects. According to a recent report from Zillow, such situations mean that buyers are “gaining time and options as competition eases.
This may seem like a terrible buyer’s market, but there are other factors that complicate the picture. In particular, for example, home prices continued to rise, eventually hitting a record high in June. And despite the many questions, a recent poll found that most Americans still think this is a good time to buy a home.
So, it’s complicated.
“As a result, it’s an open question whether we’re approaching a buyer’s market in some parts of the country,” Zillow senior economist Jeff Tucker told Iman.
Tucker continued, “What we’re seeing right now is a rapid transition from a seller’s market, by any definition, to a balanced market.
Tucker said the turnaround so far has been most pronounced in markets like Seattle, Austin and other parts of the West — which have seen significant price appreciation during the pandemic.
Still, sellers today are getting higher prices than they were a year ago. And other regions, such as the Midwest, have seen less change than expensive markets on the West Coast.
James Baker, CEO of investment firm and business incubator Fusion Growth Partners, echoed the same sentiment, saying he sees a market that is “definitely leaning toward buyers right now,” although sellers are still getting multiple offers and some areas have fewer than two. Items of the month.
“There are never too many houses,” added Baker. “Obviously it’s tilted in the buyers’ position, but this is still, as of today, a seller’s market. If a seller wants to sell their house, they can sell it.”
What Baker and Tucker both point to is a trend toward buyers getting more leverage, even if the advantage isn’t universal across the board. York Bauer, CEO of real estate technology firm MoxyWorks, described the trend as “reversion to the mean, not a recession.”
“I think the market is coming back to balance,” he continued. “The pendulum swings back.”
Agents are seeing this dynamic play out in their own markets.
Crosthwaite explains that a seller’s market is typically defined as having less than three months’ worth of inventory. A balanced market has three to six months of inventory, while in a buyer’s market there is more than six months of inventory. And as the number of offers on properties dwindles, Crosthwaite said her area still has less than three months’ worth of inventory.
“We’re still in a seller’s market,” she said.
Some properties are more attractive than others
Andrea Geller, an agent with Chicago-based Berkshire Hathaway Home Services, told Iman that condos in smaller buildings and contemporary homes in the suburbs are still in high demand.
“If you can close and get in, there’s still a premium for that,” she says.
But when it comes to homes with outdated furniture or features, discounts should be made. Geller said that if two similar homes are on the market, the one without improvements may sell for less than $50,000 because “there’s a smaller audience of people who want to do the work.”
Crosthwaite has seen the same thing in her marketing.
“You don’t get the look of homes that aren’t marketed or well presented,” she said of buyers in the Des Moines area.
If this generally sounds like the normal state of affairs – solid properties get more attention – remember that inventory was so low during the coronavirus pandemic that less desirable listings were flying off the shelves. And even earlier this year, this was still true.
“Six months ago,” Crosthwaite, “People were desperate because the rate was 3 percent.”
In other words, the seller’s market remains, but buyers can find more desirable properties or areas.
“You can say a neighborhood is hot, but it’s not necessarily a neighborhood,” Geller added. It’s his property.”
Returning a suitable activity to the buyer
Where the pendulum is now, Crosthwaite notes that some practices that fell out of favor in her market when houses essentially sold themselves have returned. Among other things, she described home builders who have started offering incentives to buyer agents, which was not a common practice in the past two years.
Crosthwaite said open houses, including agent openings, are returning.
“I’m seeing agents begging for open houses,” she added.
Nicole Beauchamp, an Engel & Volcker agent in New York City, described the mood in her neighborhood as “complex.” But she said, “We’re definitely in a dynamic market.” And that means buyers can now ask for more than they could before.
“There are ways you can negotiate,” she said. “What’s stopping you from insisting on offers?
Beauchamp specifically mentions that closing costs and asking the seller to help buy the interest rate are areas that can now be negotiated.
These are anecdotal stories, but they highlight the consequences of a market that is in flux, and swings in the direction of buyers.
A wait and see mentality
In some cases, consumers also seem to be waiting to see where the swinging pendulum will end up. A recent report from Zillow, for example, said rising mortgage rates and concerns about affordability are “keeping demand on the sidelines and home sales tightening more than suggested.”
Ben Kinney – co-founder of the tech company BOTA and owner of the Ben Kinney Companies – made a similar point in an interview with Iman earlier this week.
“When the markets are changing, it’s when everyone wants to freeze and do nothing,” Kinney told Iman. “And that could last a month or it could last a year. That’s what we’re coming to, the eye of the storm that looks like nothing’s happened.”
The media is upset about buying a house.
The fact that the pendulum is swinging and there is now some debate about who really has the upper hand has led to a lot of media coverage. For example, a few days ago Business Insider They argue that this is a great time to buy a home if you can afford it. On the other hand, New York Post On Thursday, he suggested that the housing market was headed for a “deep freeze.” Even BuzzFeed jumped into the fray, publishing a guide on how to decide if you’re ready to buy real estate.
The arguments in these sections—and dozens like them—are not mutually exclusive. More than anything else, they highlight the anxiety level about housing. Consumers, it seems, don’t know what to do in the current market.
So what do the industry experts say? it is Is it a good time to buy?
The consensus of those who spoke to Inman for this story is yes, if you have a reason to do so, take it. Baker, for example, noted that home construction has been lagging for years, meaning there are still baked-in constraints on supply.
“I believe housing prices will go up,” he said.
Bauer says that when people ask him about a purchase — which happened recently before he got on the phone with Inman — he tells them to talk to their local agent first. But generally speaking, housing is a good hedge against inflation, he said.
“Overall I would say yes, it’s a good time,” he added.
Baur noted that it is difficult to time markets and that for most people housing is primarily a matter of shelter. The investment part of the equation is secondary. And for this reason, he suggested that people go when they want to move.
“Just buy the house if you want,” he concluded. “And don’t look back.
Email Jim Darrymple II