By Mike Bodeen · 23 October 2023
If I wanted to, I could spin our local real estate news favorably towards buyers or sellers, because on the surface there’s good news for buyers and sellers. And then again, there’s also bad news for buyers and sellers.
And with a new mid-east war erupting, global economic matters could deteriorate further. I was in this business in the late 70’s and early 80’s when oil and hostage taking played a significant part in the escalation of gasoline prices and inflation. The real estate market died.
That was then.
So, let’s start with some good news for buyers. Inventory is growing. Just 90 days ago, the number of homes for sale was 11,473- very low. As of today it has risen to 14,969 – a 30% increase in 3 months. Now, that’s still a very low number, which is good news for sellers. Some sellers may well remember the days in 2007 when inventory reached 58,000. Local sign shops couldn’t make ‘for sale’ signs fast enough. See chart below.
Buyer’s home choices are beginning to increase. And with that increase, list prices may start dropping. This has already begun in some sectors of the market.
With inventory growing due to mortgage rates in the eights, buyers could not only begin to see lower prices, but their negotiating room will increase. Along with Buyers getting better pricing, they should also be asking for concessions from sellers to buy down their new mortgage rate. The buyer pool is drying up which gives buyers less competition from other buyers. Buyer boldness should be how buyers play their cards.
But there’s a problem. Rates for many (most?) Buyers are reaching unaffordability, so how do more homes on the market benefit the buyer if the rates continue their upward course. Prices would need to come down quite a bit to balance out the higher mortgages, and at this point, it’s very uncertain how much prices will drop, or for how long.
And what about sellers? Well, here’s the spin. Yes, inventory is growing, but prices have been rising as demand (albeit low) has, so far, outpaced supply.
Sellers who would prefer to sell are sitting on a very low mortgage rate. 80% of existing mortgages are under 4%, and many of those are under 3%. This is not a great incentive to sell, and most don’t have to. They can stay put. Will they?