In my long career selling homes I have made one observation that seems to hold true each year…patterns emerge BEFORE the public is aware, but the professionals see the signs in real time. You can talk to money managers, food producers, and bus drivers. Each will tell you that in their specific line of work, they could see the future long before those not attached to their industry. So what specific market condition am I witnessing as I write this article?
First and foremost, the real estate market is healthy and full of optimism. I don’t see the floor dropping out any time soon. What I do see are more subtle changes which are pointing to a different market than we have seen over the last several years. The last two years have been extremely generous to any seller that sold and closed their home. There were many more buyers than sellers which means strong prices and short time on the market. The buyers were much more tolerant of defects found on their home inspection because they didn’t want to risk losing the home purchase by asking for too much to be done by the seller. Homeowners could sell their homes without doing too much improving because of the lack of inventory. The reason for the shortage of homes on the market was that many potential sellers could not find what they wanted to purchase so they decided to stay put. It was sort of a circle which fed on to itself by less listings, more buyers and then even fewer homes available to purchase because potential sellers could not find what they were looking for.
I believe many homeowners are waiting for that sign that the market has peaked and that prices are beginning to fall. The largest group demographically in the United States are baby boomers, now ages 55-75. There are approximately 70 million of these children of the 60’s who are looking to downsizing into a one level ranch home, condominium or apartment. Add to that their parents, ages 75-95 who are living in homes that no longer match their needs. So, you have two groups who have been staying in place since the recession began in 2008. You can see where this is going! Starting next year, when the word gets out that prices may fall a bit, these two groups may decide it is time to sell the home they have loved for so many years and move to housing that meets both physical and psychological needs.
We may go from too few homes available to excess inventory in a relatively short time. It will be gradual at first but then pick up momentum as the news describes the change in the market. Interest rates will continue to rise which also usually means lower prices to accommodate buyer affordability.
The homes and condominiums in greatest demand will be one level single family homes and condominiums with attached garage. Square footage most sought after will be about 1,500-2200 square feet. The price point that generates the greatest demand will be in the $175,000-$350,000 range.
Now it is up to you to take this information and think a few years into the future. You don’t want to wait until the market has totally gone flat when thinking of making your move. Next spring will be strong but not quite what it was in 2018. If you are preparing your home for future sale, you may want to think about improving your home both structurally and cosmetically as buyers will be more discerning with more selection. Wood/laminate flooring, pastel wall colors and updated kitchens and baths always bring the highest dollar. That doesn’t mean you need to totally upgrade your home but don’t expect top dollar if these repairs and updates are needed.
If you are thinking of selling next year, get out today and being your search for the home you want to live in for the next several years. Once you have found the property or apartment you’ve been looking for, your move will become so much more enjoyable and focused. The best time to buy is in the off season, November-February. If you do find a property in the next few months, then you can sell in the peak market which is March-June. The richest man in the world was once asked, “What is the secret of obtaining wealth?” The answer, “Buy low and sell high!” In other words, timing is everything!!