Is it really August already? This summer is flying by. So, real estate is back in the news in a big way again and the subject of many conversations, but for a lot different reasons than earlier this year.
Several “the sky is falling” types are out there. I am not one of them. Yes, prices are going down. And yes, homes are taking longer to sell. And interest rates continue to go up. But I think everyone, especially in the real estate industry, needs to take a breath and put things into perspective ( and remember it IS summer after all – people are enjoying themselves rather than buying homes ).
We have seen this before. Just like the stock market, the real estate market has its ups and downs, but both continue to be good long term investments. Certainly I share some concerns that our overall economy may be in for a bit of a rough ride over the next little while, but there is no need to hit the panic button. The long term fundamentals in real estate have not changed. We still have a shortage of housing (especially attainable housing) which we cannot lose sight of despite the pause we are currently seeing in the market. And of course, we also have to remember everything is relative. You may be selling for less, but if you are buying another place, you will be paying less too.
Human behaviour is an interesting thing to analyze. Buyers fought over homes and hence drove up pricing to all new highs 6 or so months ago ( THE FEAR OF LOSING OUT ), but many are now largely on the sidelines waiting to buy as pricing decreases and you can actually buy a home without competing with other buyers all the time – thinking of course that prices are going to go down more and more ( THE FEAR OF PAYING TOO MUCH ). But as we have learned in the past, timing the market is pretty much impossible ( it is more of a luck thing ). Most buyers will begin buying again after prices start to go back up.
One consequence of so many buyers ( especially first time buyers ) being on the sidelines is rental pricing has continued to go up and up while real estate pricing has decreased. My point here is, while you might not be buying your forever home and may have to compromise to buy a home you can afford, it is better to be in the market than out of it by continuing to rent at current rental rates. In the long run, you will be further ahead. Don’t try to time the market.
Even if prices go down more, interest rates are going up, so your actual mortgage payment may not be lower if you wait. Of course, I fully understand increasing rates are complicating things here, making it more difficult for some buyers to qualify for mortgages, and in fact real estate pricing will have to go down further for those buyers to qualify.
Many sellers are continuing to hold out for higher pricing, while most buyers will not ( or cannot ) pay the current asking prices. So, this is a reason for the current decrease in real estate sales activity as well. But buyers are still out there. Sellers who are pricing their homes to reflect the current market are having success in getting their homes sold.
As much as my next comments will not be overly popular, keep in mind that I’m the realtor who has been known to push the envelop in getting top price for my sellers over the years … but the fact is many sellers need to readjust their expectations. The market has adjusted. If you price too high, you will end up selling for less than if you priced at proper market pricing at the beginning.
Many sellers are pricing their home where they are continuously “chasing the market”. They price too high to start ( hoping to get lucky- which doesn’t happen often, and even less now ) , agree to a certain price reduction 2 weeks later after getting no activity, only to continue to see little or no buyer activity – because in that 2 weeks the market has gone even lower. In today’s market, you need to price your home “ahead of the market”. Just slightly below current value – which will lead to higher activity and your best possible selling price. You may even get more than one offer. Otherwise, you and your realtor may be having another conversation 2 weeks later talking about another reduction since your home is still not sold.
Real estate pricing around us ( Kitchener-Waterloo, etc ) has adjusted as much as 30% since the height of pricing earlier this year. While I think Centre Wellington & area is the best place to live, at the end of the day home values and economics often dictate where people move to, thus our pricing will need to adjust accordingly, otherwise they may choose somewhere else to live (Interesting sidenote: Coincidence or not, this week I have had 2 clients sell in Centre Wellington and buy in Kitchener Waterloo due to what they felt were more attractively priced housing opportunities).
As I have said before, for some sellers, maybe you should hold off selling for now. But if you do have plans to sell, you need to employ the proper marketing and selling strategy. And pricing is key. And not to be misunderstood – I’m not talking about pricing too low. I’m talking about proper market pricing, combined with the best marketing and selling strategy which will lead to the BEST POSSIBLE SELLING RESULT for sellers. A good selling price in a reasonable timeframe.
For an honest and straightforward conversation on your real estate needs, feel free to call me anytime at 519-766-3716.
Until next month, take care.