Put me on repeat about the Seller’s market we are experiencing and have been experiencing since March 2020. Buyer demand has increased with historically low-interest rates, but supply can’t keep up. Sellers have been able to charge more because their homes are now considered a scarcity due to the lack of Sellers in the market overall.
Typically we see the housing market ebb and flow in cyclical patterns of high buying and selling times throughout the year. We have now seen a strong Seller’s market for almost two years. Many potential Sellers took advantage of low-interest rates at the start of the pandemic to refinance their current mortgage, lowering their monthly notes, and using that additional cash flow to purchase other investments or make renovations to their current homes. This slashed the number of Seller’s in the market, even more, squeezing what was already a tight market. Just when I thought the housing market might see some reprieve with Sellers willing to take the risk of putting their home for sale hurricane season hit with back-to-back casualties over two years on both sides of Lafayette. Immediate need for housing drove demand even higher, along with prices, and our market continued to absorb as much of the demand for housing as we could.
This brings us to today, going into year three of the Seller’s market and leaving Buyers adjusting to a new ‘normal’ housing market. While it won’t be a Seller’s market forever we will see the new standard of higher home prices indefinitely. This new standard was set during the historically low-interest rates in which Buyer’s demand justified higher home values. Those new home values won’t decrease when the Buyer’s market finally comes back around because Seller’s at that point won’t take any less than they paid for their home during the Seller’s market in which they originally bought.
This doesn’t mean that Sellers can set the price by playing their own version of The Price Is Right. Many for sale by owners (FSBO) make critical mistakes when it comes to getting their home sold by missing the mark on pricing it right. Price is the initial statement to the public about a home. Taking price, location, and condition into context any potential Buyers can make assessments on the seriousness of the Seller and their willingness to work with said Buyers. FSBOs who don’t price it right miss the mark on making their first and best impression to any potential Buyers. Most Buyers work with a Realtor to look for a house and guide them through the home buying process. The first question most of my Buyers always ask me is if the house is reasonably priced, no matter if we are viewing an FSBO or a house listed with an agent. My Buyers are asking me to confirm that the asking price of the home they’re interested in is priced comparable to the other sold homes in the neighborhood.
My Buyers question the price for two reasons: 1. Am I getting a good deal? I don’t want to overpay for the house just to pay off the debts of the Seller. 2. Will it appraise? Most Buyers finance their home purchase which means that an appraisal is required. The appraisal is the last step in the home buying process before closing and one of the many out-of-pocket expenses of the Buyer.
While Seller’s have held much of the power during our housing market for the past two years, it doesn’t mean that the checks and balances aren’t there to ensure that Buyers are still getting the deals they deserve.