A panel of brokers from across the country shared views on market changes and their expectations. For one, this spring season won’t be a usual one.
MADISON, N.J. – A recent roundtable discussion with several Better Homes and Gardens Real Estate (BHGRE) brokers across the country revealed that historic seasonality patterns have been affected by today’s market conditions – most notably, record low inventory levels.
“As we enter the third spring selling season since COVID-19 emerged, the BHGRE brand wanted to explore what our affiliates were experiencing in different parts of the country,” says Sherry Chris, president & CEO, BHGRE. “The broker panel observed that strict seasonality is seeing signs of change. However, it is important to understand all of the underlying factors contributing to this significant shift in real estate market dynamics. What is clear is that a lack of inventory stemming from stalled new development is setting the industry up for continued disruption. Identifying and overcoming barriers to building new homes will be critical in meeting the incredible demand for housing that now exists in our country.”
The timing of the spring selling season varies by region. In Northern New England, the spring selling season typically kicks off in March, but with only 30 days of supply, there aren’t enough homes to create a seasonal sales “spike” this year. People also appear to be waiting out January and February to see COVID-19 cases go down to reduce potential exposure.
In Portland, Oregon, spring selling season usually starts at the beginning of the year, although the omicron variant surge stalled it this year. Brokers are seeing some traces of seasonality, but it’s not full-blown. People will move as soon as the opportunity presents itself, which means for sellers, there’s never a bad time to sell anymore.
“With just one week of inventory, an uptick in seasonal activity is not possible here in Portland,” said broker Danielle Bade. “Homes sell as soon as they come on the market. People aren’t waiting for a traditional season to enter the market.”
According to the brokers in Northern New England, prices are still considered moderate compared to urban areas. In Lehigh Valley, Pa., which sits between New York City and Philadelphia, home prices are lower compared to the major cities. In Northern California, prices are flattening out somewhat but still higher than expected due to low inventory. In Portland, prices aren’t expected to come down this year.
Despite double-digit price increases, the brokers interviewed are confident this is not a real estate bubble. Appreciation rates could moderate a bit, but prices won’t come down. Panelists are staying attuned to consumer tolerance for rising prices and seller greed, which could cool the market.
“This is an entirely different dynamic from 2008, which was driven by lax lending,” said broker Chris Masiello. “This is a supply and demand issue that is being guided by demographics: millennials and baby boomers are orbiting the market for the same housing stock. These first-time homebuyers and downsizing buyers are vying for the same properties.”
“There is a potential for prices to plateau and then return to a more normal appreciation rate,” added broker Jack Gross. “We might also see buyer frustration cause people to leave the market because they are tired of not getting a home. But consumer confidence in the housing market is high, which makes them open to overpaying.”
Shifts in buyer mindsets
Brokers interviewed are seeing an increasing sense of urgency from consumers to “win” the home, bidding up the price beyond normal appreciation rates. This means they’re paying now for what a house could be worth in two years. As a result, the phrasing has changed from “I bought a home” to “I won the bid.”
Another shift: People aren’t interested in homes requiring significant sweat equity. Instead, they’re more focused on their careers.
Further, the brokers observed that living with COVID-19 has worn down the psyche. Depending on the region, consumers are either tired of the coronavirus and moving forward with plans or still in a holding pattern created by health anxiety.
“Despite home prices increasing about 30% in Central Florida, the market is not slowing down, although the lack of inventory is discouraging for buyers, particularly first-time buyers who are contending with rising rents,” said Dana Hall-Bradley, broker/owner in Celebration, Fla.
Participating brokers report that current inventory conditions are giving new meaning to the term “seller’s market.” In some cases, sellers are becoming irrational on pricing, insisting on list prices well above current market values. In other instances, sellers are getting more cautious with pricing too high. However, homes are still getting multiple offers over list price when priced right.
“For most sellers, the biggest deterrent is ‘Where will I go?’,” says broker Chris Masiello.
“We are hearing more from sellers that it’s not always about the highest price – offers with contingencies are less desirable,” said broker Danielle Bade.
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