The changing market

For the last two and a half years, the local real estate market has been heavily weighted towards sellers, and the Capital Region has seen home values increase by 15-20%. Multiple offers have been the norm, and to be competitive buyers often needed to pay cash, offer well over asking, be willing to waive structural inspections or waive appraisal contingencies. Even though interest rates were at historic lows, the lack of inventory thwarted people eager to move from finding a house, and after making offers and losing out to other buyers multiple times, even the most optimistic buyer found themselves disheartened. So while it was a great time to sell, it was a tough time for most buyers, and particularly brutal for anyone trying to buy their first home.

Mortgage interest rates started going up this spring, coinciding with the traditional time many sellers list their homes. While there has been nowhere near a glut of homes hitting the market, the increased inventory coupled with the reduced buying power many are feeling has prompted a change in the market. Listings are not necessarily getting offers in the first 12 hours and price reductions are starting to reappear after a long hiatus. This change is making home sellers nervous.

Pricing homes is a challenging process (and one of the reasons you hire professionals like us) because you are utilizing historic data to make a prediction about the future. Current sellers have watched their neighbors’ homes sell quickly and for over asking price, and looking at the closed sales prices, are expecting to put their house on the market now and have a similar experience. It's understandable that today's sellers are a bit skeptical when we explain that showing activity is down, buyers are cautious of overpaying and the higher rates have impacted how much they have to spend on a home.

While this might feel a bit ominous, as times of change often do, we believe there’s lot of room for optimism. Yes, the pace of sales is slowing somewhat but homes are still selling relatively quickly and the offers sellers are receiving remain quite strong. Perhaps the days of slapping eye popping list prices on homes is over, but on the other hand buyers are finally able to view homes with the luxury of a bit of time to think about whether it’s the right fit for their needs. For some perspective, take a look at the 30 year fixed rate mortgage data that Freddie Mac publishes, going back to 1971. While it's been a while since the rates have been in the mid-5s, they are nowhere close to historic highs. It's easy to look at the recent past and forget how things were pre-COVID but homes that were priced commiserate to their assets and limitations sold back then and they will continue to sell. We are here to guide you through the process of buying and selling and remain committed to provide you the most up to date information so that you can achieve your real estate goals.