As we head further into Summer we are seeing more than our typical seasonal slowing of the real estate market. In fact, we are seeing the sharpest market deceleration since the 1980’s! All of this was by design, of course. The rise in interest rates was purposeful in order to slow the market and that’s exactly what it has done.
We are now seeing both an increase in supply as well as a decrease in demand, bringing these two categories closer to balanced, although we are not there yet. This time last year we had about a 2 week supply of homes, now most areas are seeing somewhere around a 2-month supply of homes. Remember, we need about a 6 month supply of homes to be considered a balanced market. At our current pace, we could hit that balanced market by Fall.
It’s not all doom and gloom though. We needed this market shift! We could not sustain double-digit price increases for long. Many buyers were frustrated at the lack of homes available for sale, the inevitable bidding wars, and the need to waive contingencies just to secure a contract. Some of the buyers dropped out of the market altogether due to this frustration. Well, it’s now your time to shine Buyers.
Now is the time to get back in the market. You will find more choices and less competition. Yes, interest rates are bit higher, however the average person only keeps the same mortgage for 3-5 years. Remember, you can always refinance when rates come down again, so don’t let today’s rates scare you.
It’s time to get back to reality with your selling mindset. The days of multiple offers, thousands and thousands over asking price on day 1 are over. This doesn’t mean it’s a bad time to sell, it just means you need to be realistic. Set the price of your home in-line with current market comps and plan for enough time to get the home under contract and then sold (~3-4 weeks to get the home under contract). Make the home presentable for both photos and showings and be prepared to possibly pay for some minor repairs and/or concessions.
Take a look at the stats from June for some of our popular cities and neighborhoods. You will notice the sharp increase in supply compared to this time last year.