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The real estate market may be cooling down, but like water going from 212 degrees to merely 210, the change may be imperceptible if you dip your toe in, because a full simmer is nearly indistinguishable from boiling.
Earlier this summer, Bankrate reported that the third quarter promised some relief for buyers seeking a place to live, and while it may be true that things are cooling off ever so slightly in many markets, that doesn’t mean the housing hunt has gotten noticeably easier for most would-be buyers.
“It’s still competitive. We’re going from 20 offers on a place to four offers on a place,” said Angelica Olmsted, an agent at Denver’s RE/MAX Professionals Cherry Creek. “When I say it’s cooling down, it is, but we’re not really feeling it.”
So, if you’re planning to embark on a home search or hope to buy a new place to live in the coming months, prepare yourself for what’s in store.
What’s going on in real estate
“We’re still in a strong seller’s market,” said Shanta Patton-Golar, region 15 vice president at the National Association of Real Estate Brokers, and an agent with ERA Brokers Consolidated in Las Vegas. “Homebuyers are still competing against a minimum of 10 offers, especially here in Las Vegas. There’s still strong competition.”
Even as more homes come on the market, the National Association of Realtors (NAR) projects that new home construction will lag behind market demand by about 5.5 million homes in the next decade, so there’s little long-term relief in sight, even as life returns to pre-pandemic normal.
Things are rebounding slightly, however. NAR reported a 3 percent increase in listings from May to June of this year, and Realtor.com reported a 9 percent increase in the last week.
What homebuyers should expect
The key thing for buyers is to be realistic about how tough the housing search is right now.
“We’re advising our clients: you won’t get one quickly, but you will get one and you only need one,” Patton-Golar said. “On average, we’re probably writing 30 offers per buyer.”
Because competition is so tough, buyers still need to be prepared to offer more than the list price, and also may need to make other concessions to sellers.
“Even offers coming in at list price are being discarded and rejected within an hour,” she said. “If the best you can offer isn’t money, think about other terms,” like waiving inspections or appraisals.
It’s also important to get preapproved or prequalified for your mortgage. Among other benefits, it proves to sellers that your offer is serious.
Olmsted added that many buyers’ bidding strategies have changed in response to market conditions.
“It used to be: get your offer in as soon as possible and follow up consistently,” she said. “Now it pays to wait until right before the acceptance deadline to submit. If you submitted earlier, they used your offer against you, so you didn’t have a shot.”
Above all, Olmsted said, buyers should try to avoid getting too attached to a property they’re bidding on, because the odds are probably not in their favor.
What home sellers need to know
“Homeowners are still making the rules,” Patton-Golar said.
While the market does continue to favor sellers, helping them get top-dollar for their properties and other concessions from potential buyers, there are some guidelines they should continue to follow.
“It is more important than ever for sellers to price correctly,” Olmsted said. “If it’s not priced correctly, it will sit, you will have to drop the price and people will think something is wrong with it.”
To avoid a price cut, Olmsted said sellers or their agents should research their neighborhood and make sure the list price is in line with the closing price for other nearby, recent sales.
What do agents expect the rest of this year to look like?
While more properties should become available in the months ahead, there will still likely be more interested buyers than there are homes available. So, competition is going to remain intense for the foreseeable future, but that doesn’t mean buyers should drop out of the market.
“If you’re ready to get into the market with me now, there’s no point in waiting, let’s do it now,” Olmsted said.
The search may just take a while.
“I’m not sure that people can afford to wait,” Patton-Golar said. “The median prices in most communities have gone up significantly. With interest rates going lower, now is the time to buy because if interest rates go higher, that’s less borrowing power you have.”
She added that it’s especially important for minority and lower-income households to stick with it.
“This type of market can be very detrimental to communities of color and low-to-moderate income households, but by no means does renting make sense for that population, because this is the only way they create wealth for their households and their communities,” she said. “Stick with it, make this a goal. Sometimes you have to fight for what matters most, and this is one of those things.”
The rest of this year is likely going to remain competitive in the real estate market, and buyers need to be prepared for what’s in store if they are determined to become homeowners.
“You have to be creative and diligent and ready for the long road,” Patton-Golar said. “We have to work a little bit harder.”
But finding the right agent and steeling yourself for a series of rejections can make the process less intimidating.