What home buyers and sellers need to know now to succeed in the market
By now, it’s clear we’re in the middle of a housing market adjustment. Which means that some of the strategies being employed by buyers and sellers as recently as 6 or 8 months ago are now out the window. It’s time to adjust to the “new” normal, which, in reality, is beginning to look a bit more like the “old” normal, prior to the pandemic.
What’s changed? Quite a bit, but for now, let’s focus on some of the highlights:
Mortgage Rates are Up
Mortgage rates are hovering around 7%. Compare that to the beginning of this year when rates were closer to 3.5%. The result is diminished buying power, meaning home buyers will need to come out of pocket with more cash to get the same home, or look at lower priced listings to get something they can afford.
Inventory is Up
Not so many months ago, there were approximately 2,000 homes listed for sale in our northeast Florida Multiple Listing Service (MLS). Today, there are more than 7,000 active listings.
On the one hand, this is good news. With inventory increasing, buyers shouldn’t have to resort to some of the extreme measures (waiving inspections, waiving appraisals, etc.) we’ve seen in the past. Sellers, however, may need to adjust their expectations accordingly as we move to a more balanced market.
Showings are Down
Even with more inventory on the market, the number of people going to see homes is on the decline nationwide (PDF). The good news here in Florida is that showings are only down ~6% in the South, whereas every other region has seen double digit declines. Hopefully, we’ll soon see home prices better align with interest rates and inventory, which should help drive up demand.
So, what can buyers and sellers do now? If you’re a seller, work with an agent to do a deep dive on the market value of your home today. Because it may be quite a bit different than what you might have expected back in January. And be prepared to sit on market a bit longer than you might have if you had listed earlier in the year, or at the end of last year. Homes are taking nearly twice as long to sell today as compared to just this past spring.
If you’re a buyer, work with your agent to really crunch the numbers on any home on which you may want to make an offer. You don’t have to (nor should you) take the risk of waiving inspections or appraisals. Rather, work with your agent to find out what pain points (other than price) you may be able to help a seller with. Do they need more time to stay in the home while they find a new one? Offer a 60-day close or short-term leaseback, if possible. There are plenty of ways to get creative and make your offer attractive to a seller beyond just the price.
If you’re ready to buy or sell here in northeast Florida, let us help you navigate the changing housing market. Just drop us a line below: