Recently, one of my friends James, who is a Realtor, shared a story and complained that the real estate activity is changing the game rules.
James, as a listing agent, had spent weeks and finally helped his client sell the property with a total sale price $1,500,000. The early stages of things were going pretty well until last week. James felt that the buyer was somehow unwilling to cooperate with the transaction and heard through the grapevine that the buyer would like to cancel the contract just because there was a horizontal cracking on the garage foundation wall. Few days later, the transaction was canceled by the buyer, which means all the efforts James had done were in vain.
James mentioned that there would be multiple buyer counter offers for a listing house when the real estate market was extremely active last year. Of course, since that boom period, the buyer鈥s market pattern becomes further conspicuous, listing house price continues to fall. Now real estate changes from seller鈥s market to buyer鈥s market.
Have house prices really fallen?
The house demand and buying boom has sent home prices soaring 34.4% across the country in the past two years, with many areas of the housing market 鈥Overheating鈥.
Based on 鈥pendulum theory鈥, once a real estate market trend reaches its maximum, it must go back to the opposite trend. Swinging from one extreme to another.
Based on Redfin, the housing requirement boom since the first half of the year is under sharp decline. And the real estate market is entering into a new era or in other words, the Great Deceleration Period.
In the wake of the Federal Reserve鈥s frenzy of rate rises that began in March, 2022, the mortgage rates have soared over 5% and went up almost 300 basis points in half a year. That leads a lot of people concerned that will the housing prices really fall after the interest rates soared?
In the first 4 weeks of July 10th 2022, the Median real estate sales price fell 0.7% from a record peak in June, according to the latest date from Real Estate Website Redfin.
Source: https://www.redfin.com/news/housing-market-update-prices-fall-inventory-climbs/
That means the market has reversed, the lucrative real estate market is becoming chill out, inflation and high mortgage rates are taking a bite out of homebuyer budgets, the prices are starting to fall from historic highs.
What鈥s happening in the real estate market?
On the real estate inventory side, active listing houses rose 1.3% compared with last month, this is the biggest increase since August 2019.
Source: https://www.redfin.com/news/housing-market-update-prices-fall-inventory-climbs/
Shortage of Supply has improved with more listings, coming with less competitions and less upward pressure on prices for buyers.
Due to the uncertainty of the real estate market, buyers鈥 wait-and-see atmosphere is stronger than before and willing to pay much more attention to the market. Of course, there are many buyers who canceled the transaction due to their own reasons, which may lead the house back to the market again.
Buyers now have more spaces to choose from due to the high volume of inventories.
In terms of the sale price of houses, the mark-up of sold houses has slumped to 101.6%, which decreased 1% from March 2022. That is to say, it is easier for purchasers to get the dream house with an average mark-up of 1.6% based on the sale price.
Source: https://www.redfin.com/news/housing-market-update-prices-fall-inventory-climbs/
Most open houses on the market no longer have the waiting list as in the past, the listings are rarely receiving multiple offers as before. Buyer鈥s market patterns have been established, and buyers鈥 are not willing to pay more to get the ideal houses.
The current listing price is basically the same as the market price, which tends to the sellers鈥 budget cost, and even some sellers accept the counter offer with a lower price within a reasonable range.
Sellers therefore are becoming 鈥more negotiable鈥, buyers have more bargaining spaces and the degree of bidding to buy a house is greatly alleviated.
Where do we go in the current real estate market?
In general speaking, more quality houses are on the current real estate market while some potential buyers are willing to enter the market at this moment. Once those potential buyers join the game, they will have more choices and stronger discourse rights.
A 鈥healthy normalization鈥 of the housing market has given buyers more time to find ideal homes and make offers. There are even more inventories for some markets that have cooled already.
For potential buyers, although the interest rate is higher than last year, adjusting the offer strategy is a distinctive way to save more money based on the current market situation.
