In a home seller’s market, there are a lot of home buyers and not enough homes to satisfy the demand. Sellers can price their homes at above-average prices because of high buyer demand. We have been in a seller’s market for more than a year, but change may be on the way. Will we see housing prices drop in the coming months?
Is the housing market trending towards a buyer's market?
For a home buyer, getting a reduced price on a home is like getting a free set of snow tires when buying a car (I live in the north, and snow tires are a big deal!). For a home seller, reducing the price of their home leaves them feeling cheated. They've seen their friends sell their homes for thousands above the asking price but with changes in the housing market, they may be pricing their home for far less than they hoped for. Oh, the pros and cons of real estate.
Are home price reductions on the horizon? Is the housing market changing from a home seller’s market, where few homes are for sale and sellers can price their homes at astronomical prices, to a buyer’s market where houses are plentiful but there are few buyers, which brings the price down?
Visit realtor.com and you’ll see more and more price reductions, something we haven’t seen in a long time. A friend of mine is selling his house, and I was confident it would sell quickly. The home was recently remodeled and sits on a corner lot in a nice neighborhood. Instead of the house selling within weeks, it has sat on the market for a couple of months. The home price was reduced by $15,000 a few weeks ago, and I’m guessing it will be reduced again in the coming weeks. With houses like this, too many days on the market (DOM) and price reductions will favor homebuyers but leave home sellers disappointed. As a result of changes in the housing market, those crazy-high home prices we’ve seen over the last couple of years may be starting to wane.
As a home seller, talk to your real estate agent about pricing your home accurately for today’s housing market. A RealtorⓇ can research DOM, home price reductions, expired listings, sold prices, and more, all of which contribute to the value of a home. Much of this information isn’t available to the public. Still, it is crucial in determining the true value of a home so make sure you work with an experienced real estate agent when pricing your home. When a house is priced competitively for the market, it sells faster and with fewer counteroffers.
Automatic Valuation Models (AVM) are also essential in determining the current value of a home. AVM technology has advanced to a point where the features of a home can automatically be detected using “computer vision”. Features such as hardwood floors, a stainless steel refrigerator, and modern cabinets can boost the final sales price of a home. Your agent can run an AVM to determine the value of the home you’re selling or a home you hope to purchase.
Accurately pricing a home at current market value helps the house sell quickly vs. sitting on the market for months. As a seller, ask your real estate agent to compare the projected price of your home to prices found on common real estate websites (ex. realtor.com) and include DOM, AVM, and other suggestions provided in this article. The more information your agent can compile to price your home accurately, the better chance you'll have of selling your home quickly.
As a home buyer, don’t be afraid to challenge the price of a home. Ask your agent to compare it to similar homes that have sold in the area and include factors like shifts in the housing market, home components that may bring the value up or down, and pricing trends. Your agent may determine that making a below-listing-price offer is in your best interest.
Let’s see how the housing market and inventory change in the coming months. We may see home prices dropping, more DOM, and fewer bidding wars. Time will tell.
Whether you plan on selling a home or buying a home, check out our extensive guides to answer all your questions. Bookmark it so you can refer to it any time you have a question.