It's Time for a Real Estate Shake-Up: Expert's Take
Real estate market reaches unprecedented heights as homes for sale reach an astonishing $698 billion worth
The vivid hues of the US real estate market are about to shift gears, says a seasoned industry pro.
With US home listings bursting their seams, reaching record highs, we're teetering on the edge of a buyers' market, according to industry experts.
In a nutshell, the worth of residential properties in the land of the free and the home of the brave skyrocketed an impressive 20.3% compared to last year, setting a new all-time record of jaw-dropping $698 billion, as per a recent report from real estate company Redfin. This astronomical rise was fueled by a potent brew of factors: burgeoning inventory, flagging demand, and soaring home sale prices.
Ever the market guru, Redfin's chief economist Daryl Fairweather told FOX Business that we're just weeks away from witnessing a seismic shift in the real estate landscape.
"Ultra-high prices on listings are causing them to gather dust on the market. Yet, buyers can't stomach these sky-high prices, resulting in them retreating from it," Fairweather explained, adding that additional costs like mortgage payments, insurance, and taxes are giving buyers a run for their money. "Buyers just aren't biting at these elevated prices."
Speaking of the rental market, its stars are shining bright too. Fairweather hinted that, given the current state of affairs, sitting homes will have no choice but to slash their prices or risk going unsold. Newly listed homes, on the other hand, will have to be priced for a competitive edge to attract potential buyers.
"It's been a while since folks bought homes. A lot has changed. The economy is changing. So I believe more homeowners will have to grit their teeth and lower their prices," she pointed out.
Noel Roberts, head honcho at real estate firm Pending, specializing in off-market transactions, concurred with Fairweather, remarking that the game is about to change for sellers as the inventory gears up.
"Some urban areas require the highest income for homeownership," Roberts added.
The number of homes on the market across the nation has surged a whopping 16.7% year-on-year in April, hitting a five-year high, primarily due to the easing mortgage rate lock-in effect and homeowners taking advantage of the looming economic turmoil to cash out, according to Redfin. Additionally, homes are taking longer than ever to find a buyer, with many sitting on the market for nearly a week longer than a year ago. There's also a burgeoning share of inventory that's been on the market for more than two months, as per Redfin.
"Sellers can no longer rely on scarcity as their silver bullet. With inventory growing, sellers need to run more strategic moves," Roberts suggested. This includes setting reasonable prices, sprucing up the presentation, and targeting suitable buyers from the get-go.
In the meantime, it's a dream come true for buyers, with a bountiful crop of negotiation opportunities, according to Roberts.
"This ain't doom and gloom, but rather a call for discipline. Sellers who adapt will sell homes, while active buyers are more likely to secure good-value properties," he said.
The mismatch between sellers' expectations and buyers' willingness to pay is due in part to some homeowners being locked into affordable mortgages. However, the lock-in effect is starting to thaw as buyers get accustomed to higher rates and the realization that they need to move rings in their ears, Redfin stated.
Sellers, though, will still rake in a decent payday for their properties, despite the market not crumbling, according to Fairweather. She predicts that many sellers who have to relocate will feel the pressure to slash their prices to facilitate the sale.
- Daryl Fairweather, Redfin's chief economist, states that ultra-high prices on listings are causing them to remain unsold, with buyers unwilling to pay such prices, due to additional costs like mortgage payments, insurance, and taxes.
- According to Noel Roberts, head of real estate firm Pending, sellers can no longer rely on scarcity and need to set reasonable prices, spruce up presentations, and target suitable buyers to compete in the growing inventory.
- The housing market is experiencing a surge in the number of homes on the market, reaching a five-year high, due to the easing mortgage rate lock-in effect and homeowners taking advantage of the looming economic turmoil to sell.
- Sellers who adapt to the changing market conditions are more likely to sell their homes, while active buyers are likely to secure good-value properties, as suggested by Noel Roberts.
- Table for a buyer's market, as the US real estate market is teetering on the edge of a significant shift, according to industry experts, with the mismatch between sellers' expectations and buyers' willingness to pay due in part to some homeowners being locked into affordable mortgages.
