JUNE 2024 - MARKET UPDATE

It has been a couple months since our last market update - the longest we have gone without writing one.  It’s difficult to write fresh material since the market continues to be very stagnant.  Generally, it is a balanced or lean Buyer marketplace.  The total number of listings steadily inch higher, while prices are moving lower.   Before panic sets in though, trust that this is the normal track during a period like this.  We had a very long period of time with upward movement on pricing, and the interest rate spike in May of 2022 dampened it.  Like a massive oil tanker slowing to a halt on the seas, it takes time for the market to cool off.  In this case, almost two years.  

So here we sit at what feels like bottom.  We could be here for a while, or interest rates finally subside and then we start to move positively in terms price.  Until then, the “stagnant stalemate” in our current marketplace will persist.  High interest rates will deter buying, a softened market plus the inability to find an attractive loan will deter selling.  However, this doesn’t mean that we are seeing a lack of activity.  Active buyers capitalizing on the soft market are out there searching for deals and Sellers that need to sell still place their homes on the market.

For Buyers: It has been a long time since we could confidently say to most buyers that the time has never been better to enter the marketplace.  Until recently, competition was fierce and Seller concessions were hard to find.  But that has changed.  If you are looking to buy, now is as good a time as we have seen for buyers to enter the market, particularly if you are in a cash position.  Buyers who need a loan should not be afraid.  Rates are bound to come down soon providing the opportunity to refinance.  Additionally, with Sellers feeling desperate again, concessions like rate buy-downs are commonplace.  These work by having the Seller provide the Buyer a cash concession to be used to “buy down” the interest rate a lender is offering.  This results in a lower short-term interest rate and, consequently, a lower monthly payment.  Other concessions, like pre-paid HOA dues, more flexible closing dates and the propensity to do more repairs are readily available to today’s Buyers.

For Sellers: Sellers have been in control of the local housing market for the better part of a decade.  The recent shift has meant that Sellers must be far more realistic in their expectations.  This starts with price.  Comparable properties from six months ago may have sold for higher than a Buyer will pay today.  This unusual depreciation is hard to accept for many Sellers.   Not believing the change and pricing aggressively may result in very high days on market and properties willbecome “market worn”.  It’s imperative that Sellers today realistically price their homes as they come to market rather than chasing the price that will ultimately draw the right buyer.  Additionally, Sellers should be prepared to make concessions and be open to contingent contracts.  Our feeling is that this won’t last long, so if you do not need to sell now, you may be better off waiting until we see a change in interest rates or after the November elections.  (Take a look at this month’s article about elections to understand more)