I love the original "Back to the Future" movie! Do you, too? Well, I can’t help but think of today’s housing market compared to the film.
Sellers have tended to be stuck in the past, expecting the market to be hotter than it actually is right now. And some buyers are stuck in the future, anticipating lower prices ahead and, therefore, expecting to score a deal below what the market will allow (at this time).
Tension is real: The tension between buyers and sellers is real, but the remedy is simple. It’s key for buyers and sellers to be realistic about the market that actually exists.
Staying connected to the present is the goal here instead of fixating on a hot past or a colder future.
Ultimately, sellers need to listen to buyers, be open to the idea of offering credits, and recognize there’s a really good chance the property is going to sell below the list price. And buyers can take more time shopping, but also recognize it’s not January 2008 when properties were priced at “rock bottom” prices.
How I'm describing the market right now.
The quick version:
1. Buyers are gaining power.
2. Sellers are losing power.
3. The sharp change in recent months has begun to level.
4. Seasonal price declines have been more pronounced.
5. 25% of the market is missing right now.
6. Lots of stats are now softer than pre-pandemic normal levels.
7. Uncertainty remains present in light of rates above 6%.
Buyers are gaining power
Last year, buyers had to basically bend to the will of sellers, but now they are able to take more time shopping, they’re getting in below the list price in many cases, and credits from sellers are on the rise. A significant number of home sales include seller credits right now and I expect that this will continue for the next few months.
Sellers are losing power
Sellers used to have the luxury of reviewing 8 offers from the weekend, but that ship has sailed. About half of all active listings have had a price reduction from the original list price. Even though sellers are starting to listen more to buyers, they are still behind the ball because of how many price reductions we’re continuing to see.
The sharp change in recent months has begun to level
The market showed a sharp change with sales volume, but over the past month or so we’ve started to see the numbers go sideways a bit. This means instead of showing yet another month of massive change, the market has sort of stabilized. Granted, volume is still down 25% or so from last year, but the market has seemed to find a little more balance lately. Of course, this could change with mortgage rates shooting up again.
All I’m saying is a number of stats have gone more horizontal lately, so the sharp change from May onward looks to be subsiding (well, besides prices). And the real culprit for change has been seeing fewer new listings hit the market since June. That’s given some breathing room for sellers and buyers to figure out the new market.
Current Concord home market inventory is at 110 homes for sale – very low compared to the past decade in the month of September (I remember 185 to 212 homes on average for sale).
Inventory didn’t spike: By the way, inventory actually dropped last month too. Monthly supply saw a huge uptick in recent months, but that spike didn’t continue last month.
Seasonal price declines have been more pronounced
It’s normal for prices to drop at this time of year as the hot spring market fades away. But price declines have been much more pronounced this year. In other words, we’re seeing easily about twice as much price deceleration compared to normal. We still need time to understand the long-term trend, but for the time being prices have seen a more dramatic dip lately.
The median price is down about 7% since May in the region, which is about $45,000. Keep in mind this doesn’t mean every property has gone down by that much, so please look to neighborhood comps to understand neighborhood dynamics.
NOTE: Prices this year crested in May, so it makes for an awkward comparison when we analyze May to August this year with previous years.
Take away for this week: We’re all just trying to figure it out! If you want to buy a home, find the best place for you and your family and negotiate like a pro. If you want to sell a home, present it really well, price it for TODAY’s market and be flexible in your terms.
Houses are selling, and the terms for each are based on what buyers are willing to pay and sellers are willing to accept! It’s that simple and basic!
