The first 8 months of 2013 have been a “perfect storm” for home sellers across the country. Multiple offers are driving record home price appreciation. Yet, as recently as a year or two ago, sellers could barely “give their house away”.
So what caused this incredible turnaround?
- In the wake of the housing recession, sellers’ expectations were crushed.
- Interest rates were at record lows.
- Lenders were anxious to make loans again.
- The job market and consumer confidence were improving.
- The stock market hit record highs.
- Rents skyrocketed.
- Buyers had pent-up demand. The usual reasons for wanting to buy a house piled up: job changes, marriage, divorce, babies, death.
These factors shrunk the pricing gap between sellers and buyers to zero. Simultaneously, lots of highly motivated and qualified buyers were chasing a limited selection of homes for sale from depressed sellers.
So will this Perfect Storm end? Absolutely!
- Sellers are getting greedy in their pricing. (Yes they read the newspaper about the hot market)
- Interest rates, while still at historically low rates, have risen.
- Buyer ranks are thinning as many have bought while others have simply given up.
- Fall is coming, to be followed by the holidays and winter.
The result is that the price gap between seller and buyer is increasing. Although, it is still a hot sellers’ market, we are seeing more price reductions and properties previously under contract come back on the market.
While I am not predicting that average prices will decline anytime soon, I am expecting a stabilization and major slow down in appreciation. Buyers’ agents will soon be able to again negotiate against the seller’s price instead of against their own buyer. (In crazy multiple offer situations, the buyer’s agent only strategy is to try to negotiate their buyer to offer a higher price).
That’s my prediction. What’s yours?