The quiet market
The marketplace keeps answering the question of whether an election year boosts the real estate market. And that answer still remains no. Here is your proof. This market continues to echo the (non-election) 2023 market – low volume and even quieter than the previous year. Again, the culprit is interest rates. The recently released Consumer Price Index showed the annual inflation rate had declined to 3.3% and that good news immediately caused mortgage rates to drop below 7%. Still, it wasn’t a large enough drop to create a major boost in demand.
While interest rates may not be currently motivating buyers, sluggish demand and supply that is up 54% from last year (according to the Cromford Report) is providing buyers an opportunity to buy that has been missing for years. In the midrange price points, sellers are giving concessions to buyers in more than half the cases. Sellers have recognized that buyers need help with closing costs and buying down rates – as monthly payment impacts buyers more than sales price does. In the million+ category, rates are not typically a factor and pricing is therefore the target. The average seller in that category is giving up $51,000 in price, up from last year when the average was $36,000.
With supply slowly and steadily rising all year, sellers are coming to grips that they need to work harder to attract a buyer. Sellers haven’t seen a supply/demand ratio as anemic since 2014/2015. As in any market, buyers are rewarding the attractive, well-priced and well-marketed homes. The less desirable homes with deferred maintenance, need to price more aggressively. Both categories of sellers need to get pricing right and manage their expectations. Agent choice matters – good marketing, good market knowledge, and proper pricing are the seller’s best friend.
Russell & Wendy Shaw
(Mostly Wendy)