May and June were the peak of the housing season, but real estate experts have pointed out a strange trend that played out during that period. According to Redfin, most home sales were sealed at 0.3% less than their listing price during that period.
Housing experts find this strange because, over the years, homes have always sold at, or above, the list price during the late spring and early summer sale peak.
Homes Are Selling at Lower Than Their List Prices
Redfin found that well over 68% of the homes sold during the four-week peak period ending June 23 changed hands at less than the list price. Since the last major jostle of the housing market in 2020, this was the lowest quotient of house pricing.
According to Daryl Fairweather, chief economist at Redfin, “It means that the housing market is starting to move to the buyer’s favor.”
Putting Buyers at an Advantage and Sellers at a Loss
While the new development puts a lot of bargaining power in the hands of buyers, sellers are being handed the short end of the stick. This is a positive development for most homebuyers, as the housing market has been brutal to them in the past few months.
Indeed, most homeowners opted to retain their old houses since they maintain their low interest rates, unlike the current high mortgage rates of new homes.
Home Sellers Had Their Field Day During the Pandemic
Fairweather admitted during a recent interview that homebuyers had to wait out a tumultuous housing storm earlier this year. According to him, home prices were at a record high during the period, making a home purchase out of the reach of several potential buyers.
However, things have loosened up in recent weeks for buyers. There are 8.2% more house listings than a year ago.
ALSO READ: $13 Million Housing for Migrants in Maine Causes Controversy
More Homes Are Remaining Unsold on the Market
Real estate analysts have compared the number of home listings this year to two years ago. They found that only 50% of listings during the 2022 housing peak spent more than 30 days on the market. This year, the proportion went up to 62%.
A real estate broker associate, Ryan Sypek, gave the situation perspective when he said, “During the pandemic, I had a house that had 60 offers on it, and now if I have a listing, I’m lucky if I’m getting four.”
Home Sellers Would Love Prices To Revert to Its Pandemic Era
Economists suggest that homeowners may have given in to the herd syndrome while deciding the listing price of their homes, unknowingly walking into a trap that will favor buyers.
Fairweather said, “People are setting prices based on what they saw their neighbors’ homes sell for three or four months ago, and maybe that was when there were more buyers on the market.”
Homes Were Quite Scarce and Expensive During the Pandemic
During the pandemic era, buying a home was more like an auction bid, and most sellers got more than the asking price for their property. The market trend of that period was due to the high demand for real estate.
However, in recent times, the housing market is gravitating back to normalcy. When the market is stable, sellers are expected to list their property at, or a bit higher than, the price they hope to get. Buyers naturally go for better bargains if the listing price is too high.
Home Glut Is the Situation in the Housing Market
Between June 2023 and June 2024, the number of home listings rose by 37%, indicative of a significant growth of home sale inventory. This means more affordable homes are coming on the market, which is exactly what most buyers have been waiting for.
Consequently, sellers still listing their properties to earn pandemic-era profits will likely find their property lying fallow and unsold.
Desperation Causing Some Home Owners To Sell Short
Fairweather said of the pandemic profits of some sellers, “During the pandemic, homes were selling above asking price, and in some locations, they were selling for tens of thousands of dollars above asking price.”
However, the tables have turned, and homebuyers are currently at an advantage because of the many unsold properties. Some sellers can get so desperate that they end up selling for a bit less than the list price of the house.
Home Sales Are Dependent on the Prevalent Weather
It is suggested that the recent stormy weather played a role in the trajectory of the housing market. This school of thought believes home sales peak in spring and early summer due to fair weather.
However, an unseasonable heat swept through the US in June, discouraging some homebuyers from venturing out for house viewings. A Redfin manager said, “I’ve heard some clients say, ‘It’s so hot outside I don’t want to see anything.’”
ALSO READ: Maine Residents Protest the Construction of $13M Rent-free Housing Complex for Migrants
By Now, Home Sellers Should Know Better
The recent trend of homes selling lower than their list price should be enough reality check for sellers. Economists have equally shared that there’s a limit to how high home prices can go.
Sypek perfectly described sellers’ desperate situation: “What I’m hearing everywhere is that there’s just a lack of urgency from buyers right now, and urgency, and that feeding frenzy, is what drives prices up.”
There’s No One-Size-Fits-All Metric of Home Pricing
Nonetheless, Sypek cautions anyone who wants to venture into the real estate market this season. He explains that the US housing market is complex, with regional microcosms and individual heartbeats.
So, making projections on a Massachusetts market would be unsafe based on recent deals closed in New York City. Jess Clegg, a Massachusetts broker, suggests that where your home is located is inconsequential, but the house needs to be priced right.
You Might Also Like:
Tested and Tried Strategies To Earn $125,000 a Year or More From Side Hustles
PepsiCo Reports Mixed Quarterly Results As U.S. Demand Reduces, but Earnings Surpass Estimates
Funko Celebrates Its Origins With Project Fred 01’s Debut
U.S. Economy Adds Over 200,000 Jobs in June To Reduce Unemployment Rate Currently at 4.1%