While home prices aren’t escalating at the staggering rate we’ve seen over the past couple of years, if buyers are waiting for a crash to get into the market, or sellers are holding out and pricing in hopes of a bidding war … we want to talk about where the market is right now.
For sellers, it comes down to pricing your home appropriately for the market you’re in. For buyers, there are two avenues to address — mortgage rates and cash.
Sellers: What you need to do now
So, you’re ready to list your home. There’s great news; home prices are still up year over year. According to the Case Shiller Index, which lags by a few months, May to June 2022 saw the first dip in home price sales growth, falling 2 percent. But home prices are still up year over year — keep that in mind.
The other big factor is there are fewer buyers in the market than there were at the beginning of 2022, whether it’s because of mortgage rate increases or other economic uncertainties. In Seattle, however, the demand is there.
As of this writing, Trendgraphix reports that in Seattle, there are 2.2 months of inventory available — a seller’s market. As inventory increases to over 3 months, it’s a neutral market, and at six or more months of inventory, that’s when it is a buyer’s market. We’re not even close to that level.
As we look at the recent home sales for the area in our table, you’ll see that 15 of 25 homes sold at the listing price or higher. It’s true, the bidding wars are mostly over. But that just means you need to partner with a real estate agent who A) knows how to market your property; B) works with you on the right price point, so that you’re not undervaluing your home or inflating its worth and driving away potential buyers; and C) know how to negotiate on your behalf for the best deal possible.
Having a knowledgeable real estate agent on your side — from prepping the listing to close — is key because for a few, the answer might be taking a listing off the market and exploring other options. We’re in the process of taking a client’s home off the market because the target buyer has been hit hard by rising interest rates. It made more sense for their real estate goals to find a renter who is flexible, and who can accommodate the listing of the home when the market is better suited.
To buyers who might be on the fence
If you’ve been looking at mortgage rates, you’ll know that just when you think they’re trending down, they tick right back up again. It can be discouraging if you’re ready to buy a home — be it your first, second or 10th.
But what if you thought about it as dating the rate and marrying the home? What kind of loan you take out is a personal decision that will make sense for you and your finances, but even if you take out a fixed-rate 30-year loan, you will have the opportunity to refinance when the rates go down and get that lower rate. You can look for a home, not compete with 10 other offers like you might have a year ago, and, by 2024, when rates are expected to decline, you can work with your lender to refinance.
Cash buyers: for the past two years, you’ve had to spend, spend, spend to outcompete other offers. With more inventory on the market, this is your chance to come in and pay the current market value for the home of your dreams, that vacation getaway, or an investment property. As a cash buyer, you have some freedoms that those who are taking out a mortgage don’t have. Don’t take it for granted. Be sure to talk to your financial adviser, but for many, with a home in the right location, appreciation of real estate could be as fruitful as a diversified stock portfolio.
As global real estate advisers for Realogics Sotheby’s International Realty with 20 years of experience, we get to work with clients from down the corner and across the globe. We love helping our neighbors take the next step in their real estate journey and have seen the market’s ups and downs. We know the shifting market can add hesitation to a huge decision. Whether you’re partnering with us or one of our colleagues in the area, be sure to talk through your goals, options and how the market is shifting so you can be prepared for what’s ahead.
Linda Chou and Summer Carlton
Chou Carlton Homes
Realogics Sotheby’s International Realty