Realty Biz News Exclusive Q&A
Historically, spring has been a time when housing activity surges, but a recent conversation with brokers from Better Homes and Gardens Real Estate revealed that the current lack of inventory is dampening the usual seasonal sales spike. People are moving as soon as the opportunity presents itself, which means for sellers, there’s never a bad time to sell in today’s current market. Following are excerpts from our recent conversation with Chris Masiello, CEO, Better Homes and Gardens Real Estate The Masiello Group in New England; Danielle Bade, Principal Broker and Vice President, Better Homes and Gardens Real Estate Realty Partners in Portland, Ore. & BHGRE Northwest Living in Bend, Ore. ; and Jack Gross, Owner, Better Homes and Gardens Real Estate Cassidon Realty in Lehigh Valley, Pa.
RBN: Describe your market conditions coming into this spring selling season.
Danielle Bade: Late February is typically when spring selling season begins in Portland, Oregon, but we were delayed a bit because the omicron outbreak stalled activity. The imminent rise in interest rates will help people get off the fence, but with just one week of inventory, people aren’t waiting for a traditional season to enter the market.
Chris Masiello: The spring selling season in New England typically kicks off in early March, but we have only 30 days of supply. There is an acute lack of new construction; it is down 55% since 2001. We are seeing heavy migration patterns from Metro DC/Maryland, along the coastal corridor to Northern New England. It’s like we’ve been discovered! Prices here are still considered moderate compared to urban areas, although they are increasing, which puts pressure on local residents looking to buy in-market. Overall, 2022 is looking like a carbon copy of 2021.
Jack Gross: Lehigh Valley is between New York City and Philadelphia and is one of the fastest growing areas in the region. We currently have a one-week supply of homes, with 10 to 15 offers on every single one. Some sellers are getting a bit irrational on pricing, but this is not a bubble. Prices are not going to plummet.
CM: We are definitely not in a bubble. This is an entirely different dynamic from 2008, which was driven by lax lending. This is a supply and demand issue that is being driven by demographics: millennials, who are entering the market as first-time buyers, and baby boomers, who are downsizing, vying for the same properties. There is simply not enough supply to go around.
DB: And the demand is going to continue. The increase in interest rates from 3.5% to 4% is not a real financial deterrent and won’t keep people from entering the market. The increase may, however, be an emotional driver as people try to beat the market.
JG: We are definitely seeing an increasing sense of urgency to WIN the home and buyers bid up well beyond list prices. Common sense goes out the window. People are buying homes today for what they will be worth in two years. The phrasing has changed. It’s not “I bought a home.” It’s “I won the bid.” It’s a mentality shift that has been created by market conditions.
RBN: What are some suggestions and tips that real estate professionals can share with their buyers in today’s dynamic market?
CM: Get preapproved. Have a substantial down payment saved. If you can pay cash, do so and refinance later.
DB: Be flexible on the closing date. Always make your best offer first and resist the temptation to hold back your effort upfront. Know that competing buyers may be willing to waive the inspection or bring in money to bridge a gap in an appraisal. Prepare to compete from the beginning.
JG: Have the means to make an “additional down payment” if the appraisal comes in low. Line up short-term interim housing between sales to put yourself in a better position to compete in a multiple offer situation.
RBN: And what advice should real estate professionals be sharing with sellers?
JG: Even in today’s tight market, it is still important to put your best foot forward, so don’t skimp on staging, home repairs and cleanliness.
CM: Prepare your home for the market by hiring a professional cleaning crew and professional handyman/repair service to perform paint touch-ups, fixture upgrades, etc. This will encourage buyers to make their very best offers and can result in fewer days on the market. Offering a home warranty can help encourage buyers to waive their inspection.
DB: Ensure all potential buyers are financially qualified. Consider the terms offered to be just as critical as the price. A cash offer with fewer contingencies may be better than a higher offer with many contingencies.