“Reports of my death are greatly exaggerated.” This is one of my favorite quotes from Mark Twain along with, “The coldest winter I ever spent was a summer in San Francisco.”
For the past several months, real estate news stories have been focused on a declining market. It’s only natural that the market has slowed, due to an uptick in interest rates which has predictably effected demand. However, supplies have remained low enough to maintain current price levels, or at least not lead to drastic price reductions.
When I started selling real estate back in 2004, my broker used to say that when properties weren’t selling, we liked to see price reductions between 5-10%. That was a normal way to get a property to move. When you think about it and put that kind of pricing strategy into terms relative to the market gains in recent years, sellers aren’t doing bad at all when they need to make these reductions.
I’ve said it before and I’ll say it again, it’s okay not to get every property bid up by hundreds of thousands of dollars. It’s actually better for the market, but not necessarily individual sellers. Of course, all sellers would like to cash in those type of gains, and they were being realized when the market was soaring.
Those market conditions were never sustainable. At some point buyers needed to start becoming more realistic about the values of properties and what they could afford. That’s where we are now. Some properties are still getting overbid, which is great for those sellers. It makes pricing on the lower side all the more appealing, but at the same time riskier. Sellers may end up only getting asking-priced offers, which is not a bad thing unless sellers are expecting to get more and unwilling to take their asking prices.
We are in a more normal market now. The market is certainly not dead, and if historical patterns are followed we may even see a little uptick in the market this fall. For those buyers expecting the market to crash, you’re probably going to have to sit on the sidelines for a lot longer before you see something like that.