After several years of skyrocketing home values and historically low interest rates, conditions took a turn before the summer selling season as the Fed raised rates to counter inflation and economic concern. Home buyers looking to maximize dollars with low rates are now limping to the sidelines to reassess their position leaving many to ask, “are we in a buyer’s market?”.
Market types relate to supply and demand, and how long homes take to sell. Markets with less than three months of inventory are in the sellers’ favor, while a market with more than six months of inventory is skewed to the buyer. A balanced market sits between 3-6 months of listing inventory and the current trend is heading to one of balance. Prices may not be dropping yet but that is sure to change. Just how far remains to be seen.
After years of one-sided wins for sellers, buyers are now able to choose from more homes and negotiate on price, inspection issues, appraisals and other contingencies. Finding creative ways to counter rate hikes, like asking a seller to pay to reduce interest rates and/or paying for closing costs, are becoming more standard by the day.
For many sellers this is a hard pill to swallow as the last several years saw double digit increases in equity and demand. For buyers, once the dust settles this may be welcome relief as they no longer must fight through competing offers and pay well over list price just to be considered by the seller. Look for the new reality to take hold through the winter months and find more vigor after the New Year.