Is it going to be ok?

Experienced, talented, passionate real estate professionals are setting great expectations with clients, pricing and preparing homes well, executing flawless go to market strategies, communicating exceptionally and partnering daily with home sellers.

But sellers are frustrated as homes are still sitting.  Showings feel few and far between, prices are reducing and buyers seem to be playing a waiting game for which talented professionals don’t seem to have an answer other than, “be patient”.  Which by the way, is the right answer.

So, is it going to be ok?  Meaning, “am I going to be ok”?  The answer to that question is…it depends.

It depends on your resilience in the face of hard things (Read the book “Resilience” by Eric Greitens) and the commitment to find an inner strength this moment is demanding of you. It depends on the daily habits you embrace to pull you out of frustration, fear or disbelief and transform into enthusiasm, freedom and abundance (Read the book “The Everyday Hero Manifesto” by Robin Sharma).

It depends on you allowing yourself to transform hardship into wisdom and problems into prosperity.

And ultimately it depends on your conviction to the answer of one question; Am I capable and committed to do the work to evolve in a way this moment is demanding?

And this moment it telling us some old things, once again.

  1. Not everybody makes money at real estate and we still have a job to do.
  2. Homes for sale need to stand out from the competition.  This can be accomplished by:
    • Exceptional condition, location and presentation.
    • Price that is markedly lower than others if condition, location and presentation does not differentiate.
  3. Inventory will continue to rise and the market will simply be slower than what we’ve grown accustom to in the last 11 years.
  4. Homes will be withdrawn and listings will expire.
  5. More truth and better leadership are required of real estate professionals.
  6. It’s never again going back to what it was.  Adapt.

This market isn’t hard, it’s just different than what most people have grown accustomed to; low inventory, cheap money.

This market demands the Rise of the Professional.  And those who will adapt, evolve, and engage will very soon have more opportunities than they’ve seen in a long time.  Be the professionalism this industry should have always been, and you’ll be just fine.

Price

Make no mistake, unless there is some massive drop of interest rates, the average sold price will decline between now and year end.  As inventory continues to climb, sellers will be required to reduce price or markedly enhance the condition of their home.

Agents would be wise to do a detailed analysis of declining prices in the hyper-local seller market and guide clients on the truth of how far to drop price, if the seller really needs to sell.  If a seller doesn’t drop far enough, they may make the mistake of chasing a negative price curve.

Offers Above and Below Asking

A height of 34.5% of properties sold for over the asking price in mid-April of this year.  As of this week we are down to 23.6%

Assuming history repeats itself (which it almost always does) that number will continue to decline through year end most similar to the pattern we experienced in 2013, 2014 and 2019.

Through year end, sellers should expect offers below the asking price and that once again, negotiation skills and strategy matter.

Price Reductions

We hit a low of 22.8% of properties reducing price this year in mid-April.  As of last week,  37.8% of properties are experiencing a price reduction.

In reinforcing the idea that we simply haven’t seen these conditions in a very long time (other than the last two years), the chart below shows that not since 2009 through 2011 have we seen a significant percentage of price reductions.

By the end of the year, well over 50% of properties will experience at least one price reduction before going under contract or sellers pulling their home off the market.

The only reason an agent would consider these market conditions a problem is if they are unable to read and understand these market conditions and truthfully explain them to a seller and consult on strategy that leads to partnership.

Inventory

Inventory continues its climb and there are no signs of it slowing down.  Reminder, inventory usually peaks in September or October of each year.  With this being an “odd” presidential election cycle, we don’t know if typical patterns will be disrupted.

As of last week there were 9,839 properties available for sale, compared to 5,354 the same time last year and just 3,571 in 2021. At this pace, will likely hit close to 12,000 homes by the end of October.

But over the last couple months we have seen elevated levels of seller frustration as evidenced by homes being pulled off the market and listings expiring.

This could temper inventory increase.  With continued modest interest rate decline and elevated buyer activity in the form of showings, this may stabilize prices more than current trends would portend.

Showings

Showings remain extremely strong.  If interest rates continue their slide, expect this elevated showing activity to begin translating to contracts at a strong pace.