An American neighborhood.
Real estate broker Stephanie Vitacco says the US has been in an “artificial” housing market for the past two years.
That’s because historically low mortgage rates have led to unprecedented buyer competition.
But demand is waning and it’s good news for those who can still afford a home purchase.
Equity Union real estate broker Stephanie Vitacco says the “artificial” housing market of rock bottom mortgage rates is over and it’s time for buyers to get “picky” again.
“We got really spoiled there,” the Encino, California-based Vitacco told CNBC. “The past two years have been an artificial market. As long as I’ve been doing this, I’ve never seen anything like it.”
In the wake of rising interest rates, the homebuying frenzy has fizzled out, and dynamics are shifting. As talk of a possible recession slows homebuyer activity, the market is transforming. And experts just can’t seem to agree on what will come next.
“We were used to getting 10, 20 to 30 offers on a property,” Vitacco said. “Now we’re back to the point where condition matters a whole lot more as well as the floor plan. Buyers are being picky — and they can be picky.”
Vitacco says although sellers got used to “crazy bidding wars” they are lucky if they even get an offer now.
“We treat it like gold,” she said.
Buyers can get picky again
Buyers are slowing their roll in the real estate market. Data from real estate brokerage Redfin shows that for the four week period ending on July 17, the typical home spent 19 days on the market — one day longer than it did in 2021. Although it was a small gain, July marked the first time since the onset of the pandemic that the median time on market posted a year-over-year gain.
“Buyers, who earlier this year had to race to beat the competition, can now take their time touring homes and perhaps even wait to see if sellers drop the price,” Daryl Fairweather, Redfin chief economist, said in a housing report.
Home prices are falling. Data from Redfin shows that with less people competing for homes, the share of sellers slashing their asking prices hit an all-time high in July. Additionally, during that time, the portion of homes selling above list price fell for the first time since June 2020.
“The market slowdown is giving buyers more opportunities to negotiate, especially with sellers whose homes have been on the market for a while,” Jessica Nelson, a South Carolina real estate agent with Redfin, said in a statement. “I tell my sellers that they need to price their homes realistically from the get-go. If they don’t, their home may end up sitting on the market and they may have to drop their price—possibly more than once—to attract buyers.”