The Market: Now and Then

As real estate professionals, we’re used to big questions like: “What can we ask for our house?” and “Do you think the price will come down?” and “Will there be a bidding war?” But of course, the biggest question underlying them all is: “How’s the market?” Here’s my considered POV.

The first thing to know is that of late, understanding the market has been trickier than usual. How the market was in September was different to November, and based on just the first week or two of January, it’s different again. 

So how was the Market?

Challenging, no doubt about it. Rising interest rates plus talk of inflation and economic doom-and-gloom certainly affected the market at the end of 2022. Buyer demand slowed down because buying power for those looking to finance was substantially impacted. Add in the normal seasonal slow-down, and the result? Sales activity was much more sluggish than we have seen in quite some time, even when compared to the early weeks of the COVID lockdown.

That was then. What about now?

In just the first 10 days or so since we welcomed in the New Year, we’ve seen a shift in buyer behavior—again. Low inventory is proving to buyers that, even as interest rates rise, their home buying choices may not necessarily increase. So, where only a few short months ago buyers considered waiting until rates came down again, now we’re seeing them motivated to make offers. They’re deciding that despite higher rates, they’re not willing to put their home searches on hold. 

Then there’s seller behavior. The media-instigated panic from the end of last year certainly had its impact on them; market shifts gave everyone pause to adjust. And now we notice that our sellers are becoming more flexible. They’re listening more carefully to our pricing advice, they’re prepared to accept buyer contingencies, and they’re more willing to negotiate at the offer stage of a transaction.

There’s no crystal ball, but experience shapes our view

As we move further into 2023, my outlook for the market is both positive and measured. It seems certain that the pace of real estate transactions will be slower. But in my opinion, that’s probably a healthier situation for everyone. We will see a settling of prices. We will have lost buyers to the mortgage rate hikes, but low inventory levels will continue to keep buyer demand quite high.

I also expect that transactions will be more complicated, as contingencies again become the norm. This means that, more than ever, tapping the skills of experienced real estate professionals to manage the process will be critical to buyers and sellers.

Finally, it’s time to take a breath. Remember that rising interest rates are not a new phenomenon. We have the wisdom of hindsight to know that they inevitably come back down again. This isn’t a financial crash, nor is it a pandemic. In fact, our current conditions are simply part of the normal cycle of a healthy real estate market.