Have you been hearing and reading the mixed messages about home sales? They certainly convey real estate market uncertainty.
Are real estate prices still rising or are they falling?
A July 14 article in Mortgage News Daily says prices are still rising. You’d have to read the article to understand how they do that math. It’s along the same lines as the math that says we’re at 9.1% inflation when we know we’re paying twice as much for fuel and some groceries as we did 2 years ago.
When you read the article, you’ll see why the following news from Redfin doesn’t count.
Redfin and others are reporting an uptick in price reductions. They put that number at 15% in early May. Meanwhile, Altos Research said that as of the week of June 6, the number was 24.1%. So first of all, we really don’t know who is reporting the correct number. And then we have to ask if this a sign that prices are coming down – or a sign that more people over-priced their homes?
There have always been some people who insist on over-pricing. And, there have always been agents who will go along with it in spite of their better judgement. They eventually either reduce the price or the house expires off the market unsold. With the way prices have been rising for the past couple of years, I can see where more people might be tempted to try going even higher.
Prices, at least at the low end, may have to come down…
I think we’ll have to wait a few months to see what’s going to happen. But now that rising interest rates are coming head-to-head with the highest inflation in 40 years, change has to be on the way.
Fewer people will be able to buy, and that could start bringing prices down – or at least keep them from continuing to rise. The law of supply and demand always affects pricing.
Rising interest rates definitely lead to real estate market uncertainty.
I’ve read lately about sales that failed at the last minute. While the buyers qualified when their offer was accepted, rates had risen just far enough to disqualify them by the closing date.
Meanwhile, buyers who can qualify even at higher rates are faced with the uncertainty of when to lock their rates. The current situation reminds me of selling real estate in the late 80’s – when rates were bouncing. Sometimes it mattered whether you locked your rate in the morning or the afternoon. It was a stressful guessing game.
Do you need to be ready for more short sales?
I’m seeing signs that many agents are gearing up for that, but I don’t think you’ll see as many. With interest rates as low as they were and buyers using 30-year fixed rate mortgages, people aren’t suddenly going to be hit with payments that double or triple. Of course, if they lose employment in this chaotic economy, it will be a different story.
For now, short sales will more likely be necessary only when people without much equity are in a position of having to sell.
So how can you deal successfully with this real estate market uncertainty?
Watch your own market closely. Pay attention to what’s happening in the price ranges you serve. If you see price reductions – look for the reasons why before you assume prices are falling. (Were those houses overpriced to begin with? Were they not properly made ready for sale?)
Be prepared to give your clients facts. They may be reading national news, so let them know what’s going on at home, and in their price range.
As for advice…
When it comes to buyers, the best advice is “If you love the house and you can afford the payments on a fixed-rate mortgage, now is the time to buy.”
When it comes to sellers… You can’t say that prices will rise or fall, but you can give potential clients food for thought. With that in mind, perhaps its time to add my “Why sell in 2022” letters to your prospecting mailings.
Keep on providing the kind of service that creates loyal clients.
This is important no matter what is going on in the market.
It is also important to stay in touch with your sphere, with past clients, and with all those would-be clients who are still on the fence. This is not the time to let anyone forget you. If you aren’t sure what to say to past clients or your sphere, use one of my “staying in touch” letter sets. You’ll find them here.
And, if you’ve been talking with sellers who aren’t quite ready to take the plunge, use these seller advice letters.These will help to keep you top-of-mind with them during that time between thinking about selling and actually signing a listing agreement.
Good luck! We have some interesting times ahead.