What are the five truths that you need to know about the housing market? , this year’s market has been completely, completely unpredictable. We had the red hot market pretty much all the way through July, and mostly I would say ice cold ever since.
And now that creates a lot of confusion in the marketplace. Buyers are wondering, should I wait? And the sellers are wondering, are there ever going to be bidding wars again? Now I’m going to clean up and clear up a lot of this confusion. Five solid truths that you need to know right now about the market right now.
1. Home Prices Will Unlikely Fall Significantly.
Now what that means is supply and demand are keeping homes from dropping. If we all, if you were around in 2008, remember what that looked like, there were a lot of factors that caused home prices just plummet.
And guess what? Really, they started in about 2007 when all the way down to 2012. That’s unlikely to happen. Mostly due to supply and demand. So if you’ve been waiting for this to happen, buyers, it’s not going to happen. There are too many forces that play now, which are going to keep those prices going up.
In fact, there are many forecasts that suggest that home prices in 2023 will be about one and a half. Percent higher than last year at any given month. So just realize that that the leveling off, we peaked out, we went way up. And then all of that, all that inflated pricing that happened between 21 and 22, let’s just take an eraser and wipe that away.
And now we’re back here and we’re going to be slow and steady up this side. That’s what’s going to happen up this side, meaning as we have progressed as a seller market still and an improving market, we’re not in a decline. Home prices will just be a little more natural and very much not. Like the unnatural 21 to 22.
2. Bidding Wars Are Over
Bidding Wars are over. It’s time to realize that that was really just a pocket in time. Will they ever happen again? Probably at some point, not anytime soon. So the crazy thing about this is that the stats show that about 80% of home sellers don’t know this, they still think that bidding wars are still going on, and you’ll see that by virtue of homes sitting on the market for a long time. Why is that? Because they are pricing their homes based on yesterday. If you’re pricing your home based on anything that’s sold, Before July of 2020, I would argue before August, 2022, because these markets have long tails, meaning the markets started to shift.
You start to feel some things in June of this year, and then all of a sudden July is coming on. It’s feeling a little bit what’s going on, it’s slowing down. And then August and September and October. So, if you’re pricing based on anything, I would just go with the August figure. You’re pricing it too high.
The market has shifted in course corrected, which is actually natural and a good thing. It may not seem that way. So bidding wars are really going to be more of an exception than the rule. So don’t go into the marketplace as a seller thinking that you’re going to get that to happen if you’re in a sweet spot for pricing, I would say depending on the market, I mean definitely under 200, but wherever you are is going to change that for you.
Prices still hold on to bidding wars, but for the most part, they’re a thing of the past.
3. Buyers Must Separate Wants From Needs
Buyers have a hard time distinguishing between what they want and what they need. Now with low inventory, extremely low inventory. This time of year is especially lower than it has been all year.
Focus on the crucial needs, not the wants. An example is location. Had a buyer recently that just needed to have that fence backyard. It was a primary thing. Now she had a dog, so that makes a lot of sense. At the same time, we don’t want to flip-flop these things around. There’s a saying called location, location, location for a reason.
There’s no saying that, Fence, fence, fence. You get my point here. Focus on the crucial, and critical and then work on the other aspects of the home that you can deal with and perhaps fix later on. In this example, you can add a fence. You can’t add a location if that makes sense.
4. Sellers Must Price Homes.
Now, I kind of alluded to that back in truth number two, which is to be conscious of where the market is. Don’t go back in time and pull old data. An appraiser’s not going to agree with it, and a home buyer certainly is not going to want to. Latch onto a home priced higher than the market would demand.
And just like Goldilocks porridge, there’s a right price. There’s the right temperature for that porridge. Don’t price it too high. That’s the hot porridge. Don’t price it too low. That’s the load porridge. Get it right on the money. And that’s your agent’s job to guide you in that. Show you the data, show you what’s active on the market today.
That would be right here in the windshield. What’s sold in the last 90 days would be a good thing. And then, sale pending under contracts as a real true measure of what buyers are purchasing today just gave you a major, major, major hint on home pricing. Look at the sale pending list and look at your competition more than the rearview mirror.
5. Waiting To Buy A Home Might Not Pay Off Buyers
Think about it this way. If you’re waiting for rates to drop, that may be a big mistake. As soon as rates do drop. Imagine the number of buyers that are going to flood the market. Suddenly tipping the scales with supply and demand now, now meaning December 2022, it may not seem like a great time to buy, but if you think about it, there are fewer buyers in the marketplace because of the preconceived ideas of high-interest rates.
What most people don’t understand is that you can lock into a price at a home lower price than you could previously, and the interest rates are slightly higher. I think we’re sitting around the six-and-a-half range, however, you can refinance that next year when rates drop. So now is kind of a sweet spot.
So here’s the deal. In summary, sellers price your home, right? Using data that is mostly around the sale pending category and your active listings, which would be your competition of those active listings have a high day on the market. Don’t copy them. Don’t copy people that are not doing things that are successful and buyers.