What’s going on with the housing market?

By Gary M. Singer

Question:

We have to move for family reasons and put our house up for sale. It has been several months, and we are not getting much interest. Our real estate agent keeps telling us to lower the price, but I know what our home is worth. Just a year or so ago, several nearby homes sold for more than our listing price. What is going on?

Answer:

The real estate market can change quickly.

– Joan

Sometimes the changes are local, like when a new school is built close to an aging community, making it attractive to younger families. Other times, the change in the market is caused by more universal causes like a bad economy and rising interest rates.

Not long ago, houses were selling in bidding wars for above asking prices, and it seemed like property values went up every time you turned around. The seller’s market got so hot that it became hard to find an affordable home.

But that was then, and now the housing market has significantly cooled off.

Interest rates have risen, increasing mortgage payments for prospective buyers. Property taxes are up, as is the cost of insurance. Most home buyers are limited by the monthly payment they can afford.

As these costs have increased, so have the monthly housing payment tied to them. To compensate for this, buyers have started looking for less expensive homes.

Due to the foibles of human nature, it takes some time for home sellers to realize that the housing market has cooled.

No matter what houses were selling for in the past, homes are only worth as much as potential buyers are willing to pay today. Many sellers feel they are losing “profits” rightfully theirs and are slow to accept the new realities.

If you want to sell your house now, ensure it shows well. Keep it clean and uncluttered, and make sure the landscaping looks nice. You may want to spruce it up with a little fresh paint.

You will also need to accept that today’s prices are what matters, not what you could have sold it for a couple of years ago. Work with your agent to adjust the price to match what buyers are willing to pay now.