Between economic woes and the housing bubble burst, home buyers have appeared to have the upper hand in the real estate market for several years now. With fewer active buyers, more homes for sale, tighter lending restrictions, and falling home prices, sellers were at a clear disadvantage.
The big question is – is the buyer’s market over? Signs point towards yes. Very low listing inventory levels and increased buyer demand, combined with sellers’ unwillingness, and inability, to let prices go much lower, are shifting the balance of power back away from buyers.
For years, the homes that were listed for sale were by those that either had to sell or could afford to lose some of the equity in their homes. Of course there were also those that entered the market hoping for interest at their asking price, rather than pricing at the true market level. Needless to say, the majority of those homes languished on the market.
Regardless, as housing prices continued to drop, lost equity and lost income prohibited home owners from entering the market to move or to move up. Lost confidence in the economic market also contributed to the housing status quo.
In recent months we’ve seen increased buyer demand as consumer confidence begins to build again. Mortgage interest rates have continued to break records reaching lows unimaginable just a few years ago, potentially putting home ownership within reach of a broader pool of buyers, especially in light of tighter lending practices. According to MSN Real Estate there are also more cash buyers, putting mortgage-backed buyers at a disadvantage. Wherever they come from, more buyers means more competition. And a growing buyer pool with a shrinking seller pool means the balance of power continues to shift.
At the same time, home sellers are drawing a line in the sand. For those with mortgages (which is almost everyone), there is only so low the selling price can go without bank cooperation, as in the case of a short sale. Unless one must sell, there is little incentive for home owners to list at all, let alone lose money on the deal. Sellers must protect whatever remaining equity they have. Seller reticence has certainly lessened buyer power in real estate transactions, but at the end of the day, there still must be a buyer willing to pay what a seller is willing to accept for a sale to take place.
Regardless of whether the market favors sellers or buyers, the homes that sell are the ones that are the most desirable – those with the best condition, in the best location, with the best price. It pays to understand the market – where the buyers are, what interests them, and what they need to close the deal.
If you’re considering buying or selling, give us a call. We know what’s selling, we know who’s looking, and we can help you get your best deal.
Shawn Buryska ABR, CRS, GRI
Coldwell Banker Burnet Realty
Shawn Buryska, Coldwell Banker Burnet Realty, Licensed in the state of Minnesota