It appears that the home sale market in some areas may be changing from a hot seller’s market to a more balanced market. A balanced market is one in which neither the buyer nor the seller has the upper hand.
When this sort of shift in home sale market occurs, you usually find a larger inventory of homes of sale. Therefore, it generally takes longer for homes to sell, there are fewer multiple offers and fewer listings sell for more than the asking price.
As the inventory of homes on the market increases, buyers have more to choose from. Given more choice, buyers tend to be pickier. For instance, a home with freeway noise–that might have sold quickly, maybe even with multiple offers in a strong sellers market–could take longer to sell in a more balanced market.
Sellers should tone down their expectations as the market shifts. With more inventory on the market, pricing your home for sale will be critical. Why should a buyer pay more if there are other more reasonably priced listings to choose from?
HOUSE HUNTING TIP: Buyers that are contemplating trading up to a larger home or down to a smaller home should carefully consider whether it’s better to buy the new home or sell the old one first. In a hot seller’s market, there’s less likelihood that your home would sit on the market unsold for long. When the market shifts, and it starts taking longer to sell, it may make more sense to sell first, particularly if you’re stretching financially to afford the next home.
You never know exactly how much your home will sell for until you’ve found a buyer and you’ve worked through any inspection contingencies. In a market that’s racing higher price wise, this is less of a concern. When the market slows, you may not be able to count on a quick sale and numerous over-list price offers to choose from. If you need every dime out of your house to make the move, you should carefully consider selling first. Then you’ll know exactly how much money you have to invest in the next home.
In general, buyers should find less competition. This doesn’t necessarily mean there will be no competition. This will depend on where you’re buying and in what price range. Usually, there are fewer buyers in the higher price ranges.
Recently, buyers who had looked for months for a home were the successful bidders on an attractive listing. There was only one other offer. Months earlier, when the inventory was scant, these same buyers lost out in a multiple offer competition. Six other buyers bid on the same property.
The recent increase in interest rates has been a major factor in the changing market. When rates first started up, buyers rushed into the market. A buying frenzy ensued. This pushed prices up to record highs in some places. As sellers became convinced that the good times wouldn’t last forever, many decided to sell. And, the inventory of homes for sale grew.
A dilemma for many buyers is this. Since more listings are coming on the market, do you wait to buy until something you like better comes along? Or do you buy now to lock in an interest rate that is likely to be lower than it will be in the future?
THE CLOSING: The best strategy is to buy when you find the right house. And beware of unrealistic sellers who are only interested in selling if they can get an astronomical price.
Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.
What’s your opinion? Send your Letter to the Editor to email@example.com.