Is the housing market still a seller's market, or is it finally showing signs of slowing down? And what could the changing market conditions, if this profound shift is happening, mean for you as a seller?
Leading real estate professionals have been predicting that the seemingly endless growth in home prices, coupled with an unprecedented shortage of home listings, wouldn't last forever. Several factors suggest that the pivotal moment for housing markets across the country is at least around the corner.
As a seller, you may have been waiting for the best possible time to sell your home, or you weren't ready to sell until now due to personal circumstances. But have you missed your window to sell your home in the post-pandemic seller's market? Here's how you should navigate the changing market conditions if you are listing your home for sale and what an experienced real estate agent can do to help.
New construction numbers increase, but will that correspond to a price fall?
May has seen the most significant influx of new homes since June 2019. But does an increase in the number of new listings correspond with an end of the supply-demand gap fueling the unprecedented housing market growth over the past couple of years? There is some indication that the long decline in new instructions, which began skewing the market in sellers' favor even before the pandemic started in 2020, is finally coming to an end.
Not quite. If we look at the figures a little closer, we'll see that while the supply end of the housing market chain is slowly recovering, it's still nowhere near the levels of 2017-2019. For context, the number of active sale listings is still less than half pre-pandemic levels. So, purely looking at the supply-demand ratio, it's got a long way to go to becoming as saturated with available homes as it was in 2017. We're still very much in a seller's market. It's also worth noting that summer is peak time for new instructions. The spike in new homes on the market won't necessarily translate into an annual trend. So far, the number of new listings has grown by only eight percent year on year.
As for home prices, they are still rising, at least for the time being. As interest rates rise, the number of eligible home buyers will inevitably reduce. The aspiration toward home ownership remains so strong that what we're seeing now is what Matt Vernon, head of retail lending at Bank of America, has seen as an aggressive' market. This is where higher rates push buyers into the market to secure a home before any further rate hikes.
The result? Homes listed for sale are still not staying on the market very long, and home prices are continuing to climb. You may not get as many offers as a seller on the day your listing goes live as last year. Still, homes are not failing to sell, and they're going fast—within a month of being listed on average.
Local context is always king
Median home prices and nationwide trends always need local, regional nuance to understand how changing market conditions will affect you personally. One thing worth noting is that, right now, large metropolitan areas are recovering significantly from the relative lack of interest during the pandemic. This has created migratory patterns from expensive coastal and urban areas into medium-sized metropoles and suburban areas.
The other trend you should be aware of a seller is that interest rate increases will inevitably hit the lower tiers of the market hardest, meaning that first-time buyers will find it the most difficult to qualify for a mortgage. If you are about to sell a higher-tier family home, you have less to worry about than if your prospective buyer is a first-time homeowner.
But even within the first-time buyer market segment, regional variations will play a key role. This is where a real estate agent with in-depth local knowledge becomes valuable. A real estate agent with experience in your particular type of home in the area where you're planning to sell will have seen it all. They will know precisely who and how to market your home to, ensuring it sells at the best possible price within a desirable timeframe.