By Joedy Michael
Special to the Express
While consumers and builders remain downbeat about the 2023 economic outlook, news on strong holiday spending and lower interest rates offered a glimpse of hope that the housing market may have found its footing and will begin to stabilize soon. With inflation remaining high but showing some signs of easing, the Federal Reserve is expected to raise rates less aggressively in the coming months which should benefit both the economy and the market.
In this shifting market, buyers and sellers are struggling to keep up with the changes. A new Zillow survey of real estate agents found that buyers still believe home prices will crash while sellers anticipate bidding wars and quick sales. That’s not all that new from what we have talked about, but the impact of that struggle is very evident.
Every day I talk to people who believe that home prices will fall significantly in 2023 and, as a result, they opt to remain on the sidelines. As for sellers, they continue to expect bidding wars, over-asking prices, and quick sales despite the cooling market. I think there is a little bit of truth in both conceptions if, and only if, the property is properly priced.
Homes that are priced at the higher end of their market valuation range are more likely to sit on the market for longer and will eventually take a price reduction. Take the same home, priced below perceived market value, and it will sell within a few days.
Here’s a recent example. A home just outside our area was listed for $550,000. It came on the market on Dec. 1. I spoke with multiple clients and other agents who were almost gossiping about it — there was a definite buzz.
Based on the listing agents’ feedback and judging by the number of agent business cards laid on the kitchen counter, it’s safe to assume it was the most toured house I had seen in quite some time. Even before looking at it, our team estimated the house was likely worth north of $700K. After all, a comparable home fully updated with an ADU, on the same street had sold for $1M just one month prior.
Offers on the home were due on Dec. 6. It received 18 offers and, per the listing agent, it is in a contract for over $800K. This result would not have been achieved if the house had been priced at or around market value (which we estimated at $700K). This is a great example of an agent executing a well-thought-out strategy. It also shows that there are 17 other interested buyers.
Back to our buyers who think prices will fall in 2023. I think that moving forward, buyers will not be overpaying for a house as they may have had to in 2021 or in the first half of 2022. The sale price will be more in line with market value. For that reason, I do not think that waiting for prices to fall is the right strategy. Instead, be prepared, be alert and pounce when the right house comes by.
— Reach Realtor Joedy Michael at Joedy.Michael@norcalgold.com, or 530-545-3698.