The Real Estate Market Has Changed. Have You?

Higher interest rates, stock market volatility, turbulent politics, low inventory and a host of other global and regional conditions finally caught up with the housing market resulting in fewer transactions during 2018. Since real estate is a supply and demand business, talk of a market shift ensued and like any other self fulfilling prophesy, here we are.

My main question for every seller, buyer, agent, and loan officer these days is whether they have made the shift to reflect the current market. As you might guess, everyone says they have, but what I’m finding is not really. Particularly agents and sellers.

After an incredibly strong seller’s market which started in 2012 and a run up in prices fueled in large part by very low interest rates, we are now in a more “normal” market which may only become more so.

By normal what I mean is that it may take longer to sell a home and the seller may not get their price. Multiple offers? Be happy you get a good one. Free leasebacks, waiving loan and appraisal contingencies., selling for tens of thousands over the asking price? Forget about it (insert NY accent),

At best, new listings may at about the price of the last truly comparable sale. Or a few dollars higher, Or lower. But in almost every circumstance, with ample and sometimes substantial equity over the purchase price even if you bought on the worst day in 2007.

For agents, that means you will have to do more than just put the listing in the MLS and a sign in the yard. In other words, you may actually have to market your listings and sell them. I recently heard a scary statistic that something like 80% (or more) of the agents out there have never worked in a market like this. So forget about your Off market pocket listings, networking groups and all the other stuff you have been doing and talk to some old timers or agents who have been doing this for longer than a few years.

Of the 4 stakeholders, the buyers are the ones who have seemed to “get it” the quickest. And that’s not surprising because the market is moving in their direction. You don’t have to be paying too close attention to notice that there is more inventory, it is on the market longer and subsequently more price reductions. But don’t get too carried away. This isn’t quite “Revenge of the Buyers”. At least not yet.

What you can expect is to not have to offer quite so favorable terms and to be able to negotiate both price and some repairs. That’s a good thing. And while the activity in some segments has become quite soft, that is simply not true across the board.

As for lenders, you probably can’t expect to see the refi business as strong as it has been as rates go up. And you might have to actually come up with solutions for people and proved a higher level of service.

Truthfully, a more balanced market is good for almost everyone.

For move up buyers, if the price of the up leg home is less than it was a year ago, then even if they don’t get the price they want on the sale of their current property, they are saving more on the purchase.

For first time buyers, home ownership is still preferable in most instances to paying rent.

For agents willing to change with the times, you will do quite well because there will be less competition. As the easy money goes bye bye, the part timers and less skilled workers will drop out.

And for lenders who can service specific markets and handle the trickier files., you are providing a value the discount online websites can not.