From my March article in the Shenandoah Valley Business Journal . . . Cycles exist in every real estate market across the country, and the Shenandoah Valley is no different. Thus, it is essential that buyers and sellers have a firm understanding of their segment of our local market. To better understand our current market, here is a look at several different perspectives:
How Many Buyers Feel . . .Even if buyers want or need to purchase, many are still hesitant to move forward with an offer and a purchase, and here are a few reasons why:
- Appreciation isn't what it used to be --- while real estate values are still increasing, they are not doing so at the tremendous rate that they did between 2002 and 2006.
- National news is depressing --- we are bombarded with messages of rising foreclosures, plummeting home prices, and a possible recession.
- Peer pressure is powerful --- as long as sales continue to be low, many buyers conclude that they too should wait to commit to a purchase.
What Buyers Should Realize . . .Some buyers have started to realize that now can be a good time to buy because:
- Housing selection is ideal --- with higher housing supply than we have seen in years, buyers have more choices than ever.
- Interest rates are historically low --- as rates rise in coming years, the monthly cost of housing will only rise.
- Prices here are stable and increasing --- we haven't followed the trend of many parts of the country where prices have plummeted.
How Many Sellers Feel . . .Depending on the price range, and location of a seller's house, and their timetable, a seller may be thinking:
- My house will never sell --- even with a decent number of purchases in a given month, there will still be lots of homes that haven't sold.
- I'll lose money if I sell now --- owners who need to sell a year or two after buying are feeling the pinch, as appreciation was lower last year.
- I'm helpless --- some homes are languishing on the market, and conventional marketing methods don't seem to be producing results.
What Sellers Should Realize . . .Some sellers would like to believe it is always a good time to sell, but I would purport that:
- It is not a great time to sell --- in almost all price ranges and locations, supply exceeds demand, leading to less negotiating power for sellers.
- Overpricing is fatal --- it is essential to start with a realistic asking price, or you will likely reduce the price well below that price to eventually sell.
- You won't always make money --- the years of being able to sell 12 months after having purchased and making money are over, at least for now.
Some Conclusions . . .Here is some time-proven buying and selling advice buyers and sellers should consider:
- Only buy if you plan to stay for a few years --- the transaction costs of buying and selling, and lower annual appreciation rates make it important to consider how long you will be in a home.
- When selling, have realistic expectations --- overpricing is more harmful now than it ever has been; you will likely net more as a seller if you embrace market realities from the start.
- Do your homework --- opportunities abound for buyers in our current market, and sellers can also do well; however, it is more important than ever (from either end of the transaction) to know the relevant segment of the real estate market inside and out.
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