November 27th, 2018 4:18 PM by Taydus Taydus, AHWD, CNE, CRS, GRI
Just a few short months ago we were still seeing multiple offers, homes selling for more than list price, and Buyers waiving contingencies in their offers just to try and be competitive.
For the past several years, home sellers have been in the driver’s seat; commanding top of the market prices, refusing to make repairs, and enjoying the fruits of multiple offers and high demand for their home. Last spring (2018) was no different…or was it? Even during the heat of the season, if you looked closely, you could see just a hint of push back from home buyers. The prices for a home in the more desirable areas had reached an all-time high and the market started to cool ever so slightly; almost indistinguishable to most home buyers and sellers alike.
But change was indeed coming. In our local market we saw the typical cool down after the 4th of July holiday. Then, as we headed into the winter holidays the market quieted as is the norm…but was this “normal” for the hot seller’s market we had been experiencing for the past several years? Not quite. To say the market cooled for the holidays is an understatement. While some select homes still sold for top dollar, many started to see extended periods of time on the market and even (gasp!) price reductions!
With more homes sitting on the market a bit longer, does this mean that the pendulum had and will swing wildly in the home buyer’s direction? Maybe, but I doubt it will be long lived. Ideally it will balance out somewhere in the middle.
We are still not seeing a surplus in inventory, however it is my hope that we return to a healthier market with 4 – 6 months of inventory as of next spring.
Sellers worry that they “missed the window” and that they are going to lose equity in their homes, but I do not think that is a valid concern. If you are planning on selling your home, the local market is still very much alive and well! But you may need to adjust your expectations to a more realistic level. By this I mean:
I personally am happy to see the market returning to a healthier balance. I think it will boost buyer confidence which in the long run will be better for sellers.
But the adjustment may take some time. It is going to take a bit of time for sellers to adjust to this new / healthier norm. It is going to take time for Realtors® such as myself, to re-acclimate to a healthier market when we speak with and educate potential home sellers.
Sellers will need to accept that regardless of what their friends, family, neighbors, or their listing agent tells them, the market will dictate the value of their home. According to Wikipedia, fair market value of a home is defined by “an estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would probably pay to a knowledgeable, willing, and unpressured seller in the market.”
The market has an amazing ability to correct itself. We have been in a “Seller’s market” for several years. The market is not “softening” or “flattening”, it is correcting to a healthier balance.
IT IS STILL AN EXCELLENT TIME TO MARKET AND SELL YOUR HOME! Remember, that as a home seller, the market may return to a healthier balance, but most home sellers are also home buyers; this means that this balance could be greatly beneficial to you when you go to purchase your replacement home.
I have no way of knowing what the spring / summer of 2019 will bring. However I do know what I am seeing in the market now, and if it is any indication of next year’s “hot market” period, my guess is that we will start to see a bit of a shift towards a healthier real estate market.