Why Getting Into The Market Now is Essential for Sellers (and Buyers)

News from NAR (National Association Realtors) came out recently and they said that home sales are down 23.8%. But strangely, home prices are up 8.4%. So where's the conflict there? How are we having these crazy numbers?

Well, here's the reality — there's two reasons for it:

One is that we are still benefiting from appreciation that happened at the beginning of the year when interest rates were close to 3%.

And the second reason?

We're benefiting from low supply. We still are at a historically low supply, about 3.3 months of supply. Meaning if every REALTOR stopped working today, it would take 3.3 months of time for us to sell out that inventory.

So what's a healthy balance market? A healthy balance market is about six months of supply.

By the way, I want you to get this in your mind. It's completely different than the Great Recession. We entered the great recession with 11 months of supply. Strong buyer's market. We are in a strong seller's market coming into this recession.

Yes, things are changing. Sellers are having to become more aggressive on price, and we get that. But this is what's happening.

Now, looking forward in a 2023, what's the prediction? The big five—folks out there, the people that are really market movers and influencers—have recently forecasted what they think will happen coming into 2023.

Basically what they've thought they think as a collective group is that we're gonna have a flat appreciation in 2023. It's gonna be pretty flat.

So what's the takeaway from this?

We know what's happening now. Appreciation's gonna flatten back out for 2023. So should a buyer buy now?

Here's the reason why they should buy now:

They should buy now cuz interest rates are at 7%. Seems high, but it's not high relative to history. The history, over 50 years, is interest rates have been about 8%. We're at 7%. Seems high cuz we're coming off a 60 year lows, but it's not relatively high.

So what happens if they wait? All likelihood they wait, interest rates will rise even further. They may look back and think, "Man, I wish I would've got a 7% interest rate." My first house was 10 and a half. I would've killed for a 7% interest rate. So 7% sounds high now, but it's not gonna be high relative to the future. And remember they always have that opportunity to refinance it.

What about sellers? What should sellers be doing right now? Sellers should be on the market today. They should not be waiting because what will waiting gain them? If we know appreciation is gonna be flat, they're not gonna be gaining anything by waiting.

In fact, what's it's gonna happen is because interest rates are likely to rise, buying power will decrease. It'll put more pressure on their specific home to get top dollar. Right now you have more ability to get top dollar than you will in 2023. So getting on the market now, absolutely essential for sellers and for buyers that should take advantage of relatively low rates compared to history.

This is really important and let's not forget they've got the best negotiating power they've had in years. Compared their negotiating power to last year at the same time, it's not even remotely the same. They've got so much power coming in as a buyer today.

So couple of opportunities out there. Just want to educate you about what's happening in the market. And take this information and push that back out to your clients.

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