Inventory is up and home prices – while still climbing – are no longer soaring. So are we approaching a market that favors buyers, sellers, or something else entirely?
Conventional wisdom suggests the housing market will continue to favor sellers, at least for another year or two, but Douglas Elliman President and Chief Operating Officer Scott Durkin has another name for it.
“I think we’re entering an ‘opportunity market,’ which is a way of saying that it’s a market where we are able to match buyers and sellers because it’s become a negotiable market,” Durkin told Inman. “Having the right agent right now really gets you in front of the sellers and the property you want without realizing it.”
Many of the homes, especially in the luxury markets that Douglas Elliman caters to, are still aspirationally priced, but many buyers don’t realize they are negotiable, Durkin said. The luxury markets are currently experiencing a bit of a hiccup for sellers, but Durkin doesn’t believe it’s heading into a deep dive.
“The buyers have more to choose from because our inventories have gone up and our prices have been softening,” he said. “It’s a real opportunity for buyers right now.”
Durkin said real estate industry professionals typically prefer either a buyer’s market or a seller’s market rather than an in-between market — because nothing happens.
“We’re in a buyers market now where we’re feeling that trend, so that gives us an opportunity with all of that press and all of those hard facts – meaning the sales that have been happening and the closings – to go to our sellers and and say, ‘listen, if you’re really serious about selling, we have to make some price adjustments, we have to entertain offers that are not at the asking price, we have to be more negotiable,’” Durkin said.
Windermere Real Estate Chief Economist Matthew Gardner said he projects a balanced market in 2019, but some cities – like Boise, for example, where prices are escalating and the unemployment rate is plummeting – will continue to favor sellers next year.
Economists at Zillow have previously advised that the market won’t tilt in the buyer’s favor until 2020. Aaron Terrazas, director of economic research with the real estate technology company, told Inman that, while the effects of limited construction and historic home value growth are beginning to fade, sellers will still hold the upper hand for a few more years.
“Home sellers have held most of the negotiating power for the past several years,” Terrazas said. “Signs of that easing up are starting to show, but home values are still growing well above their historic pace and the effects of years of limited construction still linger.”
Ruben Gonzalez, the chief economist at Keller Williams said the housing market favors sellers, but in some regions that trend is showing signs of softening.
“Even in the places that we’ve seen inventory move up the most — some of those markets everyone’s been talking about like Seattle, Sacremento, Las Vegas — they’re still in the three-month range in month’s supply of inventory,” Gonzalez said. “People are feeling that marginal change a lot, but in terms of absolute levels I think most of these markets are still seller’s markets and prices are still rising.”
Gonzalez said it will take either a combination of rising incomes and declining home prices — or significant home price declines — to fully transform the current market. Some indicators suggest prices are rising faster than incomes, but it’s not nearly as out of line as the two were during the peak of the last housing bubble.
Susan Lewandowski, a Realtor with the Sereno Group, said she thinks it will take some time to move into a buyer’s market – especially in her home market of Silicon Valley.
“We have experienced such a prolonged shortage of inventory that cannot be corrected overnight,” Lewandowski said. “We have seen longer days on market these last few months and some price adjustments, but the best homes in the most desirable areas don’t linger very long.”
Lewandowski said she is advising buyers right now, however, that it’s a great time to get into the market with less competition than the typical hot spring market.
“As always, it’s our job to speak frankly to our buyers and sellers to ensure realistic expectations on both sides of the transaction,” she added.
Brandon Doyle, a real estate agent with RE/MAX Results in Minnesota, said that within suburban Minneapolis and St. Paul, a slow-down has emerged, but stressed that such an occurrence is common this time of year. Rising interest rates are adding to the cooling market, which means agents need to be aware of pricing with the homes they’re going to list.
“For sellers still on the market or planning to list we’re very cognizant of pricing,” Doyle said. “This is not the time to push the price. Some sellers are choosing to reduce the price in order to attract motivated buyers before they offer on a competitive listing.”
Doyle said affordability remains an issue even as new homes come on the market, but with rising interesting rates crunching affordability further, he doesn’t expect to see as much price appreciation as in recent years.
James Sanson, a real estate agent and team leader at Keller Williams Realty Phoenix said it doesn’t matter much whether the market favors the buyer or the seller. Agents just need to be willing to adjust their business. If you’re doing 60 percent of your business on the sell side and 40 percent on the buy side, you just need to swap.
“We’re happy both ways, we work hard on the buying side and we work hard on the selling side,” Sanson said.