Over the past few months, the market has cooled considerably, posting year-over-year declines in pending home sales in all major regions. Inflation is at a 40-year high, and interest rates are steadily rising. And with a potential recession looming on the horizon, it’s likely that we’ll see at least a small slump before it gets better.
So what can you do? For starters, now’s the time to adjust client expectations:
It’s still a seller’s market, but…
Sky-high listing prices may no longer be a winning proposition. Mortgage rates are rising, pricing many would-be buyers out of the market. Bidding wars have de-escalated, and price reductions are becoming more commonplace.
For the homeowner who is relocating or who needs to move fast, a competitive listing price is imperative. If the seller isn’t in a hurry, however, testing the market is still an option (if not a gamble). The astronomical profit margins enjoyed a few months ago may simply no longer be attainable.
For many sellers, this news will be hard to accept. But further price declines may be coming. Review the current local market to determine a realistic price, and explain the why behind the pricing to your client.
Buyers have regained negotiating leverage.
While demand continues to outpace supply, housing inventory is slowly increasing. This is good news for buyers. With more options available and fewer buyers in the market, the competition is far less frantic.
Fewer properties are being purchased sight unseen. Bidding wars have become less of a concern. Waiving contingencies is no longer a necessity just to compete.
Buyers can better afford to take their time and shop around before making purchase decisions. That said, affordability will continue to be an issue. Rising rates have reduced purchasing power, and home prices (though declining) are still rather high.
For more ways to improve the client experience, reach out today.
