Here’s what the numbers show our current real estate market is like for buyers and sellers.
I want to tell you a story that illustrates what today’s market is like for sellers. We met with a client a few weeks ago for a consultation about her home’s worth and how she could improve it. We gave her some tips for staging and minor home improvements that would make a big difference in her price, then let her know she could sell for around $169,000 to $175,000.
We felt like no matter what price we listed at, we’d get a lot of attention and receive multiple offers. She wanted to be aggressive on pricing, so we listed at the lower end. We believed we could drive up the value if we held the offers for a few days, so we came up with a strategy: List on Friday, show the house all weekend, and go through offers on Monday.
“Rising home prices are nothing to be alarmed about.”
We ended up with 43 private showings over the weekend, and 39 families went through the open house; in just three days, we had 82 showings altogether. It resulted in a staggering 19 offers, so we had a lot of options to choose from. We went with the best offer we received, which was $20,000 over asking price. By holding these offers, we netted the seller a substantial amount of extra money.
On the other side, we’re seeing a lot of potential buyers staying out of the market because they don’t want to overpay. However, rising home prices are nothing to be alarmed about. We saw home values rise around 2005, but that was largely due to unqualified loans. Today’s environment is much different, as lending is far more regulated due to the mistakes made then. Now, the biggest issue is that there aren’t enough homes for all the would-be buyers, who are flocking to the market due to low interest rates.
Last year, median home prices in Southwest Indiana increased by 8.25%; the year before, it rose by around 5%. Normally, these changes are closer to around 2% to 4%. However, homes are still affordable due to interest rates that are hovering around 3% to 3.25%. A 1% change can affect home affordability by 10%, so if you want to buy a house today at $250,000 but wait a year, the interest rate could go up 1% and stop you from affording the same $250,000 home. At that point, you’d have to look for a home around $225,000—on top of that, home values will have also risen.
If you’re waiting to buy because you fear a crash or believe prices will go down in the future, these aren’t things to be too worried about. Over the last 20 years, we only had three years when values went down, and they didn’t go down by much. Compared to the rest of the country, we typically don’t see huge price fluctuations.
My advice? Don’t be afraid of the market. Buyers will need some patience, but it’s still possible to find the perfect home at a great price. For sellers, it’s a great time to maximize the price of their homes if they want to hop into the market. If you have any questions or would like more information about real estate, feel free to reach out to me. I look forward to hearing from you soon.