Home sellers need to re-think expectations

I feel a bit like chicken little screaming the sky is falling. The sky is not falling. But, the market is shifting quickly resulting in a mismatch with sales prices and seller expectations.

I listed a nice home in a desirable neighborhood for $1.7M in May. There was very little traffic through the home even though it had tons of exposure. After three weeks, we dropped the price to $1.5M and saw a modest uptick in activity and we accepted a solid offer within two weeks.

While this was an excellent result, the homeowner was disappointed that he didn’t see multiple offers at the original price. In some ways, he’s right to be disappointed. If we had listed in March, we likely would have sold this house above asking the first week. That’s how rapidly and radically the market has shifted.

Sellers need to re-set their expectations. We have seen the peak of the market, which is now softer and weakening.

Mike Larson, a member of the board of directors at Northwest Multiple Listing Service (NWMLS) believes “Home sellers really need to re-think their expectations” the days of “multiple offers and waived inspections, at least in Pierce County, are behind us.” This is certainly true of the markets I work in.

At the end of May there were 8,798 active listings on the NWMLS, up a whopping 59% from a year ago. Much of this is due to reduced demand resulting from higher interest rates. However, even with this uptick in inventory, there is still less than one month of housing inventory compared to what is considered a “balanced market” of four to six month’s worth of inventory.

So, is this an indication that the market is about to implode? You’ll have to read here for my thoughts on that topic.