We are in a very interesting and often challenging market. 30 year mortgage interest rates have surpassed the dreaded 6% benchmark. These high rates, which are still reasonable by historical standards, have put a major squeeze on buyers. The downturn in the stock market has also impacted buyer’s abilities to make down payments. Buyers have had to adjust their expectations of what their money can buy, which is a lot less than what they could have gotten during the first two years of the frenzied Covid market. Buyers are getting priced out, but they aren’t the only ones feeling the pinch.
Sellers too are having to adjust their expectations. I’ve spoken with several sellers lately who feel like they can get prices that the market doesn’t appear to support. What happens to these houses, when sellers ask more than the market will bear? Some end up not selling their homes as originally planned and renting them out. I was recently representing a buyer and the seller wouldn’t come down to what we could afford. He pulled the house from the market and it’s now a rental. Sadly, we were less than 3% off the seller’s asking price.
I think it’s very important for sellers to consider the current economic situation when listing their homes, especially if they’ve owned them for a long time. Perhaps the value isn’t what a seller expected earlier this year, but those expectations went to unsustainable heights during the pandemic. Historically low interest rates, and an inflated stock market, gave buyers seemingly unlimited buying power. Most sellers are still in a great position due to recent gains. With the stock market solidly in bear territory and interest rates more than double where they were last year, sellers are going to need to be realistic about pricing. As a property owner myself I’m very grateful for the gains in the market.
Pricing and property presentation will be more important than ever this fall. While I think it might be okay to try selling at slightly higher than market values, with Plan B expectations of potential price reduction strategies, sellers aren’t going to be able to get away with pricing their homes $100,000+ over the market values. The best thing a seller can do for themselves is to follow their Realtor’s advice. Don’t expect massive overbidding either, that just isn’t realistic in today’s market. Recently a house in Terra Linda was put on the market by another agent and received three offers. They accepted one, which came in at the asking price.