A recent roundtable discussion with Better Homes and Gardens Real Estate LLC [1] brokers nationwide revealed that historic seasonality patterns have been affected by today's market conditions. It’s projected that record-low inventory levels may have an impact on this year's spring selling season.
“It is important to understand all of the underlying factors contributing to this significant shift in real estate market dynamics,” said Sherry Chris, President & CEO, Better Homes and Gardens Real Estate. “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. In the short term, buyers and sellers can follow the advice of their agents on how to best position themselves for success."
According to the brokers interviewed, the timing of the spring selling season varies across the market. Brokers are seeing some traces of seasonality, but it's not at its capacity. Consumers will move as soon as the opportunity presents itself, which means for sellers, there's never a bad time to sell anymore.
Despite double-digit price increases, brokers are confident the current market is not experiencing a housing bubble. Appreciation rates may moderate a bit, but prices won't come down anytime soon. Panelists reported they are staying attuned to consumer tolerance for rising prices, and seller greed, which could cool the market. According to NAR [2], as more people settle into remote work, city dwellers are moving to the suburbs.
"This is an entirely different dynamic from 2008, which was driven by lax lending," said Chris Masiello, CEO of Better Homes and Gardens Real Estate The Masiello Group in Northern New England. "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."
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 are paying now for what a house could be worth in two years. For those unable to “win a bid”," buyer fatigue has kept people out of the market in recent months.
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 being too high. However, brokers report that homes are still getting multiple offers over list price when priced right.
"We are hearing more from sellers that it's not always about the highest price – offers with contingencies are less desirable," said Danielle Bade, Principal Broker and VP, Better Homes and Gardens Real Estate Realty Partners & Better Homes and Gardens Real Estate Northwest Living.
The brokers interviewed observed that the increase in interest rates from 3.5% to 4% is not a real financial driver. They noted that they do not envision it having a substantial negative impact on the market. It may, however, be an emotional one as people get off the fence and try to beat the market. Interestingly, the participating brokers are noticing a shift in the historical relationship between inflation and interest rates, which is now inverted.
To read the full report. including more quotes and methodology, click here [3].