In the spring of 2022, inflation led to a spike in interest rates which ultimately ended the historically low mortgage rates over the past two years. Throughout the pandemic, real estate agents witnessed competitive bidding wars and houses in high demand as the seller’s market soared.
Today, homeownership has become more expensive for buyers as mortgage rates climb, lowering demand and leveling out the market. In Top Agent Insights for Fall 2022, top real estate agents across the nation forecast the current state and future of the housing market. They share insights on where sellers should show caution as a transition is underway, and we’ve laid out their top findings below.
The shifting market
As we enter this new quarter, what was heavily a seller’s market has begun to shift. Over the last two years, more than 90% of agents in their area reported a market in favor of the seller. In this recent report, that percentage dropped to 51%. This doesn’t mean we’ve entered a buyer’s market necessarily; however, more inventory has become available, easing demand pressure.
Last two years, the sellers had more leverage with low-interest rates, low inventory, and high demand. Now, buyers are adapting to the current market and feel less inclined to bend to the seller and waive contingencies in order to make competitive offers. In simpler terms, buyers are raising their standards and expecting homes to be in optimal condition. 72% of agents report an increase in contingencies and the increase in pushback from buyers on issues discovered during the home inspection.
What’s to come?
The market may be cooling, but the mindset of sellers remains in place which can lead to overconfidence and potential blindspots as they prepare to sell their homes. 75% of agents report sellers are overpricing their homes due to overlooking the flattened or decreased prices. Sellers are having to revisit offers and agents urge sellers to properly price their homes to avoid this. 86% of sellers show overconfidence with their listing, slacking on standard home prep items.
Below are examples of what agents are seeing with their clients:
- 65% of agents say deferred maintenance
- 57% of agents say too much clutter
- 39% of agents say lack of curb appeal
- 36% of agents say flooring issues
- 35% of agents say worn interior paint
- 34% of agents say opting not to stage
- 32% of agents say a dirty house
- 21% of agents say problems with major home systems
- 20% of agents say faded/dirty home exterior
- 19% of agents say bad odors
Sellers are struggling to adapt to the changing market. This is leading to listings sitting on the market for longer periods of time and eventual price reductions. In this survey, experienced real estate agents evaluate their role as having to educate their clients on this shift in order for the seller to find success in their sale. As this rebalancing continues for the foreseeable future, agents encourage sellers to approach their sales with a new mindset as it is no longer instant. Sellers will need to resort back to basics.
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