Hey, real estate fans! Unless you’ve been living underneath a rock, you have likely heard talks of a housing market bubble that could burst at any moment. Don’t worry – we’re not seeing any crashes anytime soon.
The real estate industry has been experiencing some shifting trends lately, and when compared to the last crash, there are plenty of factors that make this time different from 2008.
Back then, terrible lending regulations, a surplus of inventory, and little to no equity for homeowners was a recipe for disaster. Today, high amounts of homeowners equity and demand paired with an extreme shortage of inventory make for very different market conditions compared to the last crash.
With such a rapidly changing market it can be difficult to know what to do. So, if you’re thinking of selling a home in 2022, here are a few tips to help you get started and navigate the housing market successfully.
How do we know the housing market is shifting?
First off, how do we know the housing market is shifting? Well, the data doesn’t lie.
Here are a few data points you should be aware of to help set expectations for the current state of the market when selling a home.
New Loan Applications:
Mortgage applications hit the lowest rate in 22 years on the first week of June. Applications were 21% lower than the same week one year ago.
From April to May, we saw a 16.6% decline in the number of showing appointments.
Active, pending and sold data:
Active listings have increased by 8.0% over the last year (The first time we have seen active listing growth since June of 2019). Pending listings declined by 3.9% in April and 8% in May.
Overall, home sales are down 5.6% YOY. The good news for sellers is that the Texas median list price is up over 18% YOY.
Days on market:
Due to an increase in active listings and a decline of pending listings, we predict the average days on market will increase to around 30 days on average.
Although this is still fairly low, it is a slight increase from the extremely hot housing market we were experiencing in the months prior. So, don’t panic if your home doesn’t have a contract in the first week or two of being on the market.
Months supply of inventory:
The inventory of homes for sale in Texas rose to an average 1.3 this April, up from 1.1 in the month of March. This is the first increase since June 2021.
It’s not uncommon to see this grow during peak season, but it’s something we need to keep our eyes on as market changes happen over time.
Foreclosures have increased:
Foreclosure filings increased 160% YOY. While this may seem startling at first, it is important to remember that foreclosure moratoriums didn’t fall off until July of 2021. So it is to be expected to see an increase in filings. These foreclosures will add inventory and options to the market for potential buyers.
10 Tips for navigating a shifting housing market in Texas
- Stop taking advice from friends or family that sold a home 6 months to a year ago when the market was on fire. Things have changed and your results are likely going to be different. They may have sold a property recently, but let’s be honest – this is such an uncommon event in their life that their experience will likely not apply in the same way as yours!
- Curb your expectations. This time last year, it was almost a guarantee that you would be beating buyers off with a stick and looking through multiple offers after just one weekend. As inventory increases and the market changes, so do days on market and the types of offers you receive. It’s ok if it takes a little longer to get a contract, that is normal in a more balanced market.
- Take every offer seriously because it may end up being the best one.
- Be prepared to negotiate. For the last several years, most sellers would get multiple offers, call a deadline for best and finals, and then choose an over asking price offer with impeccable terms. That may or may not happen this time, so be prepared to work one offer and have to do some negotiating.
- Understand your local market. You should know what’s going on with similar properties in your area. How many are active and currently on the market? How many are pending? What has recently sold? How long did they take to sell and what was the final sales price? All of these questions give you valuable information to navigate the housing market.
- Be Patient. When the market starts to cool down things inherently start to take on a slower pace and sellers have to make an adjustment. While it may take a little longer than usual, if your home is priced correctly, the right offer will eventually come along.
- Make sure the house looks great both online and in-person. At ListingSpark we include professional photos at no additional charge on all of our listings for a reason, it works. We want our listings to sell, so they should stand out and be eye-catching. Make sure to take the time to clean, prep, and stage your home to draw in the best offers possible.
- Don’t be afraid to make a change or price adjustment. Within the last 7 days in the Austin, Houston, DFW, and San Antonio MLS, 6,157 listings have dropped their price. It’s not the end of the world if you started too high and need to switch gears to drive more traffic. If your home is priced too high, you will be at a disadvantage compared to other listings.
- Analyze activity and feedback and respond accordingly. If you are getting consistent feedback about the price or you are not getting the amount of traffic you were hoping for, that is typically a sign that you may be over priced and you are not attracting enough buyers. Don’t be afraid to adjust to a changing market in order to get the best buyer for your home.
- Don’t do anything that will hurt your chances of selling. You want to make sure you are not doing anything that will detract buyers from purchasing your home. Ensure the home shows well inside the house and don’t let the yard get overgrown. Make sure agents are properly incentivized to bring their clients. Commissions can be a hot button topic and many sellers want to test the waters with a lower than average buyer’s agent commission. In a changing market, you need to understand that this could negatively affect your listing. For more tips, check out our guide on how to avoid hurting your home appraisal.
Although we are not likely to see a housing crash anytime soon, there are some changing market factors that home seller should keep an eye on.
We hope that you found these tips helpful. Keep in mind, the market is always changing and so you should continue to stay up-to-date on the latest news and information. If you have any questions or need more advice, feel free to reach out to us anytime. Thanks for reading!
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