Home Sellers Go on Strike
The U.S. housing market has entered into its peak annual spring season where buyers and sellers alike get serious about their moves. Only this year there's something off: Not a lot of homes are going up for sale. According to Realtor.com, only 349,284 U.S. homes were listed for sale in March 2023. That's below the 437,270 listed in March 2022—a period which was infamous for its tight supply—and far below the 478,100 listed in March 2019. What's going on? Well, sellers have sort of gone on strike. See, if someone is eager to sell their home right now in search of a new property, they'd likely be giving up their 2% or 3% mortgage rate—one of the biggest financial perks of the pandemic—for a 6% mortgage rate. The idea of getting a substantially larger monthly mortgage payment has a lot of would-be buyers opting to stay put. Cue fewer homes coming onto the market. That said, this pullback in new listings isn't just felt on the supply side—it's also delivering a hit to the demand side. See, if a particular homeowner decides to hold off on trading up properties, it means there is one fewer home going on the market and one fewer buyer hitting the market. To better understand the nuances of the spring 2023 market, let's take a closer look at the latest data. The best way to describe the housing market over the past year is a fight between tight supply and deteriorated affordability. So do buyers or sellers have the upper hand? Unlike the new listing total (i.e. the number of homes going on the market in a given month), the active listing total (i.e. total inventory on the market) is a better indicator for the balance in a market at any given time. At first glance, it might be easy to assume that active listings/inventory (see chart below) is simply a measurement of supply, however, it's also very much a measurement of demand. See, if buyers pull back, and homes sit on the market longer, that can increase inventory levels (currently up 59.9% on a year-over-year basis) even if new listings (currently down 20.1% on a year-over-year basis) decline. What's active listings/inventory telling us right now? The fact that active listings/inventory continued to decline through March suggests that sellers are once again gaining power over buyers. At least relative to the second half of 2022, when inventory was on a somewhat speedy uptick (more on that below). While inventory has slipped a bit through the first few months of 2023, it does remain well above the historically tight levels hit in spring 2022. Among the 400 largest markets tracked by Realtor.com, 364 markets saw inventory (i.e. active listings) jump between March 2022 and March 2023. Nationally, total active listings/inventory spiked 59.9% from 351,846 in March 2022 to active listings in March 2023. In places where inventory spiked the most, in particular overheated markets like Austin (up 312% over the past year) and Nashville (up 253%), that shift of power has been dramatic. While buyers have seen an increase in power relative to the frenzied spring 2022 market, it doesn't mean we've shifted into a buyers' market. One of the reasons being, after all, this inventory jump hasn't taken us back to a balanced market. In fact, we're far below pre-pandemic inventory levels: The 562,565 active listings on Realtor.com in March 2023 were 49.5% below the 1.1 million active listings in March 2019. In theory, a market with inventory above pre-pandemic levels has seen the power dynamic shift dramatically in buyers' favor. Markets with inventory levels far below pre-pandemic levels, on the other hand, have seen less of a dramatic shift. The searchable chart below provides active listings/inventory data for the nation's 400 largest housing markets. Among the country's 400 largest housing markets, just 14 are back to pre-pandemic (i.e., 2019) inventory levels. That includes overheated markets like Idaho Falls and Logan, Utah. Meanwhile, 386 major markets are still below 2019 inventory levels. Article via FORTUNE / by LANCE LAMBERT
Should I Sell Now or Wait?
Should I Sell Now or Wait? Key article takeaways Late spring and early summer are generally the best times to sell a house, but we don't know where inventory will be. Traditionally, low mortgage rates and short supply make it a good time to sell. While today’s rates are still high, low inventory is keeping sellers in the driver’s seat in most markets. If you’re considering selling your home, it’s critical to understand the current real estate market dynamics. The volatility that dominated the market in recent years amid pandemic-related pressures is starting to ease, but that doesn’t mean there aren’t still challenges. For one thing, mortgage interest rates are ticking upward again after a brief decline and stood at 6.66 percent as of late March. That reality is making mortgage payments increasingly expensive and driving more than a few potential buyers to the sidelines — certainly not ideal if you’re on the selling side of the equation. At the same time, February’s median home prices saw a year-over-year decline for the first time in more than a decade, according to the National Association of Realtors (NAR). But the popular adage that all real estate is local continues to hold true, meaning there are plenty of places around the country where buyer demand and prices both remain strong. And with housing inventory still at an extremely low 2.6-month supply, per NAR, the nation overall is still very much a seller’s market. So is 2023 a good time to sell your home? Here are some insights to help you sort through the question. Is now the right time to sell my house? If popular opinion is any guide, 2023 may still be a good time to sell your home despite the evolving market dynamics. According to Fannie Mae’s February 2023 Home Purchase Sentiment Index, more than half of respondents still feel it is a good time to sell. “Right now is definitely a good time to sell,” says Jade Lee-Duffy, a Realtor with TXR Homes in San Diego. “Depending on where you live, housing demand has most likely jumped. In my market, San Diego, demand has recently gone up 28 percent. And housing inventory is still historically low — about half as many homes are on the market now as compared to pre-COVID times.” Of course, deciding whether it’s the right time to sell your home is a very personal decision. There are numerous important questions to consider, both financial and personal, before putting your home on the market. Your local market dynamics play a large part in whether it’s a good or bad time to sell, says Katie Severance, a Realtor with Douglas Elliman in Palm Beach, Florida. “In some areas, selling now is the right thing to do because prices are still climbing — or, at least, are not yet falling,” she says. “In other markets, prices are falling fast, so it might be best to wait to sell until 2024, when the market correction hopefully stops and interest rates come down and stay down, which will spur sales once again.” When is a good time to sell a house? Historically, spring and summer are usually the best times of year to sell a house. Realtor.com recently went so far as to specifically declare the week of April 16–22 the best time to sell. But beyond seasonality, there are many factors that might make selling your home a wise decision. Often the reasons are based on financial calculations, cost of living expenses and other considerations, but there may also be other factors that make selling your home the right choice. These include: If rates are low Low interest rates entice more prospective buyers to enter the market, which is advantageous for sellers. An increased number of buyers shopping for homes often leads to bidding wars and drives up home prices, meaning you can likely sell your home for a solid profit. If supply is short A shortage of housing inventory also drives up demand and prices for available homes. What’s more, when housing supply is low, homes on the market tend to sell much faster. If you’re ready to downsize Downsizing may be a more budget-friendly choice than maintaining a larger, costlier home. For older homeowners, downsizing may even be a necessity. “If you can’t handle the stairs anymore, or if there are more repairs than you can manage, it may be a good time to sell,” says Rick Albert, a broker with Lamerica Real Estate in Los Angeles. If you need to relocate If you’re relocating to a new state for a job or want to enjoy your retirement in a new area, and you need the profits from the sale to put toward your next place, selling may be unavoidable. “The time to sell is when you need to sell,” says Severance. “It’s a no-brainer to sell if you have somewhere to go.” Tips to sell your home If you’ve considered the pros and cons and decided to put your home on the market, here are some steps you can take to get the best deal possible. Find a good agent: The advice and guidance provided by a professional real estate agent can be invaluable, particularly amid a hot or unpredictable housing market. Take the time to interview several candidates, and ask friends or family members to recommend agents they’ve had a good experience with. “A Realtor can help you create a game plan to get your home organized and in shape to present it in the most favorable light,” says Jen Horner, a Realtor with Masters Utah Real Estate. “The right preparation will allow sellers to feel their home has solid representation.” Make repairs if needed: To help land the best offer for your home, make necessary repairs. “Sellers need to understand that they only have one chance to make a first impression,” says Horner. “Your Realtor can walk the property with you and make suggestions for preparing your home to hit the market.” Declutter the interior: You should also make an effort to tidy and declutter your home, allowing prospective buyers to see the living spaces clearly. “Less is always more,” says Horner. “The fewer items in a room, the larger it will feel. Remove any personal items. Position furniture to make the layout of the room flow and remove any unnecessary furniture.” Add curb appeal outside: Your home’s exterior is another part of making a good first impression, and it’s worth freshening up the curb appeal before buyers see it. That can include improving or upgrading landscaping and walkways, or even be something as simple as a fresh coat of paint on the front door. Invest in home staging: Staging a home for sale, particularly if it’s vacant, can help prospective buyers visualize how rooms can be used and present a more inviting and polished image. “Staging can help show the buyer how to optimize the space,” says Horner. Article via YahooFinance. By Mia Taylor.
53% of Prospective Home Buyers Think the Housing Market Will Crash. Are They Right?
A crash might benefit buyers -- but is that really likely to happen? Key points Home prices have been elevated for several years, and gains have been slowing. While some people might think the housing market is about to crash, that's unlikely to happen for one big reason. The market is still lacking inventory, meaning prices will likely remain elevated. It's pretty fair to say that the start of 2023 is not the ideal time to be buying a home. Although home price gains have been slowing down, housing prices are still elevated on a national level. In fact, as of December, home prices were still up almost 7% on an annual basis, according to CoreLogic. Not only is housing still expensive, but mortgage rates are high, too. So all told, today's buyers face big challenges with affordability. And then there's inventory -- a factor we can't forget about. As of late December, there was only a 2.9-month supply of available homes for sale on the market, according to the National Association of Realtors. It normally takes at least a 4-month supply of homes for sale to meet buyer demand. And any time you have a commodity in short supply, its price tends to rise and stay elevated until supply is able to catch up to demand. Meanwhile, a good 53% of prospective home buyers today are hesitant to purchase a home due to fears that the real estate market will crash, according to a recent survey by Cinch Home Services. But are they right to think that the market is about to take a dive? Well, maybe not. Why a near-term housing market crash is unlikely When the value of any given commodity plunges, it's usually due to there being way too much supply and not nearly enough demand. That's not what today's housing market looks like, though. Rather, today's market lacks inventory, and that alone has been keeping prices up. And because there's such an extreme lack of inventory, we're unlikely to encounter a scenario anytime soon where the demand to buy homes exceeds the supply of those available. Because of this, we shouldn't expect a real estate market crash in 2023. This isn't to say that the housing market won't ever take a dive. But let's think back on the past year. Home prices managed to show gains throughout 2022 even as it got more expensive to borrow via a mortgage loan. And if soaring mortgage rates didn't cause a steep decline in buyer demand last year, then it's reasonable to assume that buyer demand will hold steady this year, too. Should you hold off on buying a home? You may want to wait on purchasing a home because property values are still high and mortgage rates are still elevated. But you shouldn't necessarily delay a home purchase due to fears about a near-term housing market crash if you're financially and mentally ready. Nobody wants to buy a home only to see its value fall. But if you buy a home you can comfortably afford, then near-term changes in its value shouldn't really matter to you all that much. Remember, you're not buying a home to get rich quickly -- or at least you shouldn't be. You're buying a home so you have a place to live. And if you can afford that right now, then you shouldn't necessarily let fears of a real estate crash get in your way.
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