It’s Still a Good Time to Buy or Sell a Home
Anyone keeping tabs on the real estate market knows that we’ve had a few years of an extreme seller’s market. If inventory is on the market for under six months it’s considered a seller’s market; inventory on the market around six months is considered a balanced market, and inventory on the market for over six months is considered a buyer’s market. For the last two years we’ve had properties on the market for under a month, combined with low interest rates, resulting in a market weighted heavily towards the seller.
Now, across the nation over the last six months we’ve seen rising interest rates, combined with buyer fatigue, high fuel prices, and an inflated cost of living. Buyers are fatigued from writing dozens of offers that didn’t get accepted. Interest rates are pricing quite a few buyers out of homes that meet their criteria. As a result, we have seen a slowing in the marketplace. Homes are taking more days on the market to sell, and we’re seeing price reductions that we haven’t seen in some time.
Is the market crashing? Absolutely not. What’s happening is that people are taking a moment to reset and reevaluate. It means that sellers can’t stretch their prices or necessarily expect to see competing offers, but we’re still far away from a balanced market and even further from a buyer’s market. As hard as it is to make transitions in the market, especially if a buyer or seller must ride the change, I do think some good does come from a more balanced market.
Interest Rates – Even though interest rates have risen, we are still historically quite low. It’s the shock of the doubling of the interest rate in four months that has thrown buyers for a loop. For a long time, it was tough to compete with over-asking cash offers. Now I think we’re going to see cash buyers going back to looking for a deal, which means strong offers with financing are back in the game. Buyers should keep in mind that interest rates change, and refinancing is always possible down the road.
Contingent offers are getting accepted again. A contingent offer (CT) is when a buyer writes an offer on a home they would like to buy on the condition that they must list and sell their current home first. For two years there was no chance a seller would accept a CT offer which kept movement from happening in the market. Sellers were afraid to list their homes because they didn’t know if they would be able to find a place to buy. This was especially concerning for people with animals or livestock because they simply couldn’t be displaced.
Home inspections are back on the table. For quite some time to be competitive on terms, buyers would either need to conduct a pre-inspection and be willing to buy as is or waive the home inspection completely. This is not something that sits well with me when I represent a buyer. I always want my buyer to have a chance to know exactly what they’re buying and be able to budget for upcoming repairs.
Sellers will need to be a bit more prepared to get top dollar. Properties that are well presented and buttoned up are still selling quickly, but buyers are less eager to take on a project unless it is a screaming deal. My advice to sellers is to look at the home through a buyer’s eyes and make the repairs, do the cleaning, and focus on making sure everything is dialed in before listing. If a contingent offer is going to be made, I strongly suggest that the buyer’s home be prepped and photographed prior to shopping for a new home. It helps give the seller of the new home confidence that the subsequent sale will come together, and that the transaction will go as smoothly as possible.
For those who are waiting for the market to crash before they buy, that’s going to be a long wait. Often, it’s in a market like this (that’s in a bit of a pause) when a property can be acquired that would otherwise have too much competition. It’s never a bad time to buy a home—especially a primary residence. It is important to consider budget and monthly cash flow, but this is a year where I have helped clients sell homes I previously helped them buy, and with an average of six years in their homes, they have averaged equity growth of $300,000.
When people ask how buyers afford to buy in this market, I answer that it’s often the result of increased wealth realized through real estate. It’s my opinion that if a person can buy a home, they should, even if it isn’t the perfect fit right now, and leverage that equity gain into purchasing or building their dream home.
Allison Trimble is a Realtor® specializing in equestrian properties, farm and ranch properties, and residential real estate. As a former horse trainer, and a current owner, breeder and non-pro competitor in cow horse and reining events, she combines her experience in the horse industry with her lifelong real estate expertise to guide her clients through the real estate process.
Learn more at www.coastalrealtywa.com