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Happy Spring!
I hope this finds everyone well and dusting off the winter. I have to say, Spring Buzz is in the air for buyers, but not so much for sellers. The triggers for inventory shortage have changed, but the net result remains the same.
While still not as high as the historic average prior to Covid, which hovered around 7.5%, the increased interest rates have simmered certain buyers and knocked others completely out of the affordability ring. All the while, there have been major layoffs throughout real estate and lender industries. So what's holding us in a sellers market at this point?
Higher interest rates and limited housing continue to keep many sellers on the sidelines. Thus, demand is still high with supply painfully tight. While inventory continues to rise, it remains nearly 50% below available listings in March, 2020, which was our last "normal trending" month before the wrath of Covid fully kicked in as many of the active listings carried over from February, 2020 while the nation dealt with shock.
We have been operating in the "aftermath phase" for some time now. The market has been an ebb and flow of crickets until a property drips on the market. If a property hits that is priced well and effectively marketed, the chance of multiple offers, particularly below the $350,000 price point, is high. Below $300,000 is practically a blood bath these days. Many in that price point are renters or first time buyers seeking home ownership. There is a troubling undercurrent going on in that sector that will be discussed in greater depth in upcoming issue.
While some homes are being gobbled up quickly, there is an overall increase in days on market (read: "sitting" listings) as certain offerings appear to be attempting one last squeeze from the market with overpricing. Didn't work during the height of Covid frenzy and historic inventory shortage and still doesn't.
Case in Point
My listing at 712 Traver Road, Pleasant Valley. On Market Date: February 2, 2023. The listing opened with a two week consideration window before my clients would consider any offers. Consideration windows allow buyers time to see the property and appropriately consider their purchase. They have worked very well for my clients throughout Covid and buyers routinely share appreciation for the grace they inherently instill into the process.
The comparative range, on paper, for this listing in Pleasant Valley was $469,000-$489,000. I knew if buyers came to see this solidly built and impeccably maintained property, the chances the sale price would escalate were high. Buyers are highly savvy these days. They have generally been in the market far longer than pre-Covid norm. If I had priced where I thought my seller would end up (my goal was $529,000,) we would have likely discouraged buyers from coming and negotiated down with a singular buyer. I had to stay in line with comparatives and price accordingly.
Mixed in with other homes in the comparative was a property around the corner from my clients home that entered the market eight months prior, in June, at $525,000. Their last reduction was in October to $499,000. By the time of that February comparative, it had already been sitting on the market for another four months at its reduced price. Rather than price against overpriced listings, I give them purpose and leverage them to support my clients sales.
My client opted to enter the market in the lower end of suggested range. Not underpriced, but the lower end of range. 712 Traver Road, Pleasant Valley entered the market on February 2, 2023 for $469,000. Here's the listing. My client was on and off the market in two weeks. How much over ask did it sell for? My client was both cute and sweet with this. Watch the 30 second reveal.
That $499,000 listing remains on the market. It is now approaching a year on the market while my client just around the corner was on and off the market in less than two weeks and sold for $550,000 or $81,000 over asking. Moral to the story: sellers can ask any price they want. At the end of the day, buyers determine value (whether up or down) through the sale price. While buyers are less in number, the flight over ask of this most recent sale along with the other still sitting proves buyers continue to be willing to climb the pricing ladder against each other but are repelled by overpriced listings.
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