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Sellers Are Lagging Behind the Reality that it is Becoming a Buyer’s Market: Improper Pricing is to Blame for Slowing Sales

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Wednesday October 24, 2018
Sellers Are Lagging Behind the Reality that it is Becoming a Buyer’s Market: Improper Pricing is to Blame for Slowing Sales

        Objectively speaking, the housing market should be experiencing a boom; the economy has improved consistently, and employees are earning significant paychecks. Even millennials are reaching an age where they are settling down and starting families. Taking the strong economy paired with an increased demand for living spaces large enough to accommodate an entire family, it is odd that the housing market isn’t booming. This article will address the underlying issue in a general manner.

        The September resale numbers dropped by 4.1% compared with September of 2017. Additionally, the August resale numbers dropped by 3.4% (5.15 million homes); this represents the lowest number since November 2015.

        It is fairly standard for home sales to drop in September, particularly after a high sale summer season when many families are trying to settle into their new home prior to their children going off to school. However, the numbers above are only comparing 2018 and 2017.

        Many experts believe these numbers represent a national cooldown in the housing market as it shifts from a seller’s market to a buyer’s market; this is good news for the aforementioned millennials who are seeking to start families. Put plainly, the number of available houses on the market is beginning to exceed the number of potential buyers in the market – this naturally results in a slower price growth on housing.

        The decline in sales seems largely attributable to the fact that many sellers do not understand that a paradigm shift is occurring; a shift from a seller’s market to a buyer’s market. Despite this shift, housing prices are not declining in the vast majority of the United States. Over the last 79 months, the median price of existing homes has risen consistently. In September, the median price of a house was $258k, an increase of 4.2% from September 2017 (remember, sales dropped by a similar 4.1% during the same period) making it clear that pricing your home reasonably is the key to selling your home.

        To compound the issue further, mortgage rates have also been increasing, which creates an additional cost to would-be buyers. Mortgage rates rose to 4.72% at the end of September, which is a significant increase from the September 2017 rate of 3.83%.

        Taking the increase in mortgage rates and housing prices, it is no surprise that home sales are on the decline; many sellers are under the impression that they are still in a seller’s market and can therefore inflate the value of their homes; remember that the longer a house stays on the market, the lower it’s perceived value. Sellers who want to maximize their investment should sell their houses at a reasonable value if they want to attract buyers in this market.

        The highly skilled agents at the Chernov Team are always monitoring the housing market for indicators that will allow them to assist their clients; this includes reviewing the market to determine what a “reasonable” price for your home is. At the Chernov Team we understand that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves with the most.

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