by Katie Johansen, Vice President | 03 Oct, 2022
There's good news and bad news, depending on which side of the transaction you're on. The white-hot housing market is starting to show signs of cooling down, but it doesn't mean prices are necessarily dropping. The number of new listings coming on the market increased in August, but home sales kept up at almost exactly the same pace. This means that although more homes were being listed, they were being snatched up just as quickly.
However, homes are staying on the market a bit longer than they were earlier in the year, and buyers are finding themselves with more time to make their decision. We are even starting to see more price reductions, which also translates into the ability to negotiate more than was possible in the first half of the year. Keep in mind that this may not be true across the board - well-priced and well-kept homes, especially in the first-time homebuyer price ranges, are still in demand.
Why It's Still a "Seller's Market"
Even with the rise in interest rates and the recent correction in the market, there just aren't enough houses to go around. It's that simple. This is because the current inventory of homes for sale is low, and fewer new homes are being built. During the pandemic, we saw unprecedented shortages of lumber and other building materials.
According to the Home Builders Association of F-M, home starts are down about 20% YTD compared to 2021. This, along with the increased cost of building, has pushed potential new home builders to look for existing homes. This has kept the overall demand in the FM market very high. So is it a seller's market?
The not-so-clear answer is it depends. Sales statistics show that the scales would still be tipped in favor of sellers, but buyers are enjoying increased power than in months past.
Wait Until Fall or Winter
The housing market tends to cool down in the winter (pun intended). As a buyer, this means that you'll likely have less competition for the house you want. However, there will also likely be fewer homes on the market to choose from. Even if you are toying around with the idea of moving, it's best to still be prepared throughout the winter months, as you never know when your dream home may list!
Keeping in touch and up to date with your mortgage lender and your REALTOR® will ensure that you don't miss out if and when the perfect home becomes available. You don't want to lose out on your dream home because you didn't have an up-to-date mortgage application! And don't worry about moving in the snow - one could argue that moving during 100-degree weather can be just as miserable! In the end, it's all worth it to be where you love.
As a seller, listing your house in the winter can mean less competition from other houses. This can often work to your advantage, considering that buyers who are looking during the winter months tend to be more serious about their search. Not many people want to trudge through the snow and cold to just kick the tires! Many large corporations also wait until the winter months to relocate their employees, so that market tends to be very active toward the end of the year.
Does it Hurt to Wait?
No, but it also won't pay off as much as you might think. Many people have chosen to wait and see what interest rates do, but I would caution against waiting too long. Our market is still seeing rising prices (especially in new construction) which may wipe out whatever dip in rate that may come down the line when it comes to your overall monthly payment.
For example, a $250,000 purchase price at a 6% interest rate would drop about $150 per month if the interest rate is lowered to 5%. But, if the price of that $250,000 house increases to $275,000, your monthly gains are essentially wiped out. Always keep in mind that in the event of dipping interest rates, you can always refinance. As we say, marry the home but date the rate!
Trust a REALTOR®
Nobody understands the current housing market like a REALTOR®. When you're ready to buy or sell, reach out to a REALTOR® first. They'll help you navigate the highs and lows of the market and help you feel confident about your decision.
Vice President, FM REALTORS®
Berkshire Hathaway HomeServices Premier Properties