The Transitional Housing Market: Where Are We Now?
New agents and customers often ask me about the changes that happen in the late summer and early fall housing market. Right now, the market is in a place where, unlike the last two years, sellers might get a handful of showings and no offers, even when a house is competitively priced. Buyers might actually have the time and chance to make an offer and ask for an inspection, which in the previous market, was difficult. It’s not your imagination, the housing market is transitioning. We are not seeing a full reversal of what we’ve seen the last two hectic years, but what we are seeing is a softening—a little like a middle-aged person’s abdomen.
Additionally (like the metabolism of middle age) part of the housing slowdown is to be expected; the fall is a busy time for families and typically a slower time for home sales. Some of the slowdown is connected to the transition out of the COVID restrictions. People are traveling again and able to focus on other priorities. To be honest, the softening in the market might be just what we needed. The pace at which houses were selling was not sustainable for buyers, sellers, or developers. The inventory could not keep up with the demand, and the pause helps builders, developers, and the construction industry regroup.
More not-so-bad news for sellers (and middle-agers) is that if your house is competitively priced, it will still attract attention (like a “dad bod”) and will probably still sell within a month or two. It’s important to be aware that with the slowdown, more and more buyers are going to refuse to pay for houses that are priced too high above market value. Additionally, the slower market helps give buyers time to do an inspection and add an appraisal clause or two in their ask. And sellers, not to worry, an inspection helps both parties remain on the ethical up-and-up. It’s protection for everyone.
What does the transition mean in the long term? Will there be more volatility? What does the slowdown mean for first-time homebuyers? Is it still a good time to sell? Mostly the future looks bright. First, chances that prices will ever drop dramatically is, frankly, slim, and even though material and lumber prices remain expensive, they appear to be leveling off. Probably the worst news continues to be for first-time homebuyers. The average starter home in Rochester, Minnesota, and other growing communities just doesn’t exist anymore. For workforce housing, the less expensive house is more likely to be in the mid-$200,000s, and that may be more than many low-to-moderate income households are able to bear. Finally, for those homeowners still looking to sell in the fall, there’s typically a push between the mid-to-late September through Thanksgiving that offers a bump in sales. If you’re one of those homeowners, don’t be afraid to enter the housing market during this time of transition, it’s still a good time to sell.