If you’ve been paying attention to housing market news, you’ve probably heard about decreasing sales, rising interest rates, and increasing inventory. Do these factors mean we’re heading for a housing market crash? According to the experts, the answer is no. Instead of crashing, our housing market is correcting.
During the crazy housing market caused by low-interest rates and the increased flexibility of remote work, prices skyrocketed. In fact, the average home price increased by 10.2% from July 2021 to July 2022. The truth is that the crazy pandemic market wasn’t sustainable. According to Moody Analytics, 210 metro areas were overvalued by 25% or more.
If you’re looking to sell your home soon, what does this all mean for you? Fortunately, we’re still in a seller’s market, but you have to be careful about how you price your home. If you make the wrong move, your house could sit on the market for a long time, and you may have to decrease your price.
In a correcting market like ours, it is more important than ever not to price your home too high. If you do, you could end up “chasing the market.” In this scenario, your initial price is too high, and buyers won’t look at your home. You could try lowering your price, but by that point, the market may have changed again. This is a seller’s worst nightmare—if it happens, you may even have to take your property off the market and try again later.
One strategy that works in a shifting market is to price your home slightly below market value on purpose. It seems odd, but this will guarantee that your home is the most attractive deal in your area. If everything goes according to plan, buyers will flock to your house, and the competition among them will naturally bring the price up to or above market value. The risk with this strategy is that if only a few buyers come to your home, there might not be enough competition to drive up the price. However, this is a fantastic option if you need to sell quickly.
Of course, you can always work with a real estate professional to look at comparable sales in your area and find a goldilocks price—one that isn’t too high or too low, but just right. This can be difficult to do on your own in a correcting market, but professionals have access to market data that will make the process much easier.
The bottom line is that sellers can still achieve fantastic results in this market as long as they do their research and price their homes correctly. If you would like to discuss which strategy might be best for you, don’t hesitate to call or email me. Make it a great day!