Is Now a Good Time to Sell a House? Selling in a Shifting Housing Market

Home sellers have heard about how limited inventory has pushed prices up and led to bidding wars: many are now coming to the market expecting their homes to sell immediately, and for thousands of dollars over asking.

While this may still be the case in some regions, potential home sellers should be aware that the market as a whole is cooling down (to more typical price appreciation).

How do we know? 

Signs the market is cooling

•  U.S. purchase applications last week were 20.5% lower YoY (year over year) at the beginning of June, according to the Mortgage Bankers Association - and 40% lower than at the height of the pandemic housing boom
• At the end of May, Redfin reported that nearly one in five sellers were lowering their prices, something not seen since October 2019
• Realtor notes that there was YoY inventory growth for the first time since mid-2019, with the market seeing a 6.3% increase in newly listed homes since last year
• Redfin's Homebuyer Demand Index indicates that requests for home tours and related services are down 14% YoY as of the week ending June 12 - and that was the 9th consecutive week of declines.
• Home sales are getting canceled at the highest rate since the beginning of the pandemic (Redfin analysis of MLS data)

If you’re a buyer and you’re waiting for a massive market correction, keep in mind that prices are rising today for different reasons than they did before the '08 housing crash. In other words, we’re extremely unlikely to see a wave of foreclosures trigger a price collapse. Instead, we should expect to see home prices appreciate less rapidly. 

Whether prices will fall at all, though, remains to be determined and will likely depend on larger forces of economic inflation as well as the mortgage rate. The higher the mortgage rate goes, the more prices will fall since consumers will reach hard limits on their borrowing ability.

What Agents Are Seeing in the Field

"Days on market are a thing now - it’s no longer hours on market." -Realtor Ruben Concepcion

A disclaimer: demand varies depending on the local market, and even hyper-local markets (like a hot neighborhood) can behave differently from their metro region. 

However, it appears that there are some consistent trends in markets across the country.

• “Things are definitely slowing down, as far as the number of buyers who are coming to view properties and putting offers in is concerned," observes Brett Stephenson, a listing agent based in Philadelphia. "It has a lot to do with interest rates rising, and it has a lot to do with this being the first summer since 2019 that’s actually a normal summer. It definitely slowed down a lot."
• "I'm seeing a noticeable drop in offers on houses. Days on market are a thing now - it’s no longer hours on market," says Ruben Concepcion, a listing agent based in New Jersey. 

How This Will Change the Seller Experience

Don't panic at the thought of trying to sell a home while property prices are in a downward spiral - we're not there yet. While inventory is rising, it's still a far cry even from an equilibrium market. As our most recent Market Outlook shows, the majority of markets still have close to one month of housing inventory on hand - and six  months' inventory is considered a balanced market.

Still, you may need to adjust your expectations if your sights are still set on the crazy market conditions of last year where buyers waived all contingencies, paid 20% over asking, and threw in a seller rent back to sweeten the deal.

• "Sellers need to temper expectations - they need to adjust the amount of money that they anticipated getting. Those numbers that they had six months ago might not be realistic for all properties right now, and they have to be much more conservative when they’re listing their house for sale," recommends Stephenson.
• "Seller expectations need to be altered a little - just because their neighbor was able to sell their home a million over asking and not having to do anything, doesn't mean they can expect the same today," explains Concepcion. "Sellers are going to have to start conceding on some of the things that they didn't have to concede on before. If they want the most money that’s fine, they have some leverage and they have a product other people want - but they're not going to get every single checkmark on their list."

How to Profit More From Your Home Sale

Now that you aren’t guaranteed to have a multi-bid situation on your home that pushes the selling price up many thousands of dollars, how can you position yourself to profit more on your home sale? There are several ways to approach this.

Refresh Your Home

In a super hot market, buyers are willing to pay over asking even if the house needs repairs to the deck and a fresh coat of paint - they’ll do whatever it takes just to close. In a cooler market, though, these little touches can start to have more impact on whether someone bids for your home - and how much they’re comfortable with putting down. Since buyers will also have more inventory to choose from, they won’t feel as forced as they were before to take whatever comes available so long as it hits their major “must haves.”

Keep in mind that most major renovations don’t have positive ROI (return on investment) - so you’ll want to stick to the small but very visible updates that bring your home up to date. Fresh white paint, a colorful outdoor rug for the patio, re-painting the front door, getting rid of clutter - these are the sort of manageable updates that can help make your home look newer and more spacious.

"Eye candy gets people in. You can still get buyers in by just having the updated look," notes Concepcion. "Even if you're not going all out, get fresh, basic flooring or carpet, just something that looks clean and new. Updated painting if you need it." 

He emphasizes that even small updates can make a big difference to buyers. "I've seen 1980s pink tiling all over in bathrooms, and there are companies that will put a fresh coat of paint on that to bring it into this century. If people come in and they feel like they’re back into grandma's house, they’re walking out."

Say No to Shoddy Photography

Having professional, bright photos of your home that showcase its best features while making it seem as spacious as possible is essential for getting the most money from your home sale. In a super hot seller’s market, this may not have mattered as much. As buyers peel away from the market due to rising costs, however, you’ll have to work harder to stand out - especially as inventory is increasing.

How much does good photography matter for a home sale? 

• 46% of home buyers polled by Zillow said that viewing pictures of the home is highly important in determining whether a home is right for them
• 22-27 pictures is the ideal range of photos for real estate, according to Zillow. Homes with fewer than nine photos are about 20% less likely to sell within 60 days.

Most of us can anecdotally verify that great photography matters for selling homes: it’s hard to get excited about viewing a home that you can barely see online. And when sellers add fewer photos, buyers may assume this means there is something to hide.

Work with Houwzer and Save Thousands 

When the housing market cools down, home sellers begin to look more critically at where their profit is going. Did you know that the typical home seller pays 6% of the home’s selling price in commission fees (3% to each agent)? For a $600,000 home, that’s $36,000. And that’s not counting your various other closing costs, moving fees, and everything you’ll need to pay for your new home. 

Houwzer is a next-generation brokerage that is doing real estate differently. Rather than charging a commission for listing services, they charge a flat fee of $5,000. The internet has changed how people buy and sell homes, but traditional brokerages have been happy to keep the cost savings to themselves. 

Houwzer isn’t a discount brokerage that makes you do the work yourself, though. Included in the $5,000 flat fee is everything you’d get from a traditional brokerage - the guidance of an experienced local Realtor, professional photography, listing your home on the MLS, additional marketing (mailers, social media, signage, etc), and more.

Talk to a Houwzer agent

Price Competitively, Not Aspirationally

If you’ve heard about how competitive the market has been, and how some home sellers have gotten 20% over asking, you might think it makes the most sense to price high - then price reduce if no one bites.

In a cooling market, however, this is a risky approach for those who want to maximize their profits. Why?

• A home sale’s greatest visibility is its first week on market. If you squander this, it’s difficult to regain the momentum of being a fresh sale. 
• When you price slightly below market value, you encourage a larger number of buyers to view the home. When you price above market value, you discourage buyers that are actually in the home’s true price range from viewing the home. Though it sounds contradictory, you can often net more profit by pricing your home competitively - because it allows for more people to see it. 
• When homes are priced arbitrarily high, buyers - and their agents - often assume the seller will be difficult to work with, and difficult to negotiate with. So rather than taking a chance at seeing whether you’ll come down in price, they’ll often bypass your home altogether. 
• Consider that even if everything goes well and you receive an offer for higher than the home is supposed to be worth, the home sale may fall through anyway if it doesn’t pass the appraisal contingency. Lenders won’t give a home loan for more than the home appears to be worth - and buyers in this market don’t always have enough cash to make up the difference.

"Price too high and you’re just going to keep sitting on the market, and the longer you sit on the market, the higher the interest rates go - which is just a bad combination," advises Stephenson. "Take your Realtor's advice. Price where they suggest you do and if your property is really worth more than that, then hopefully the buyers will acknowledge that, and competition drives the price up a little bit."

So: Should I Sell my House Now?

If you're looking for reasons to sell your home now, there are plenty: market conditions still heavily favor the seller. However, there do seem to be several indicators that the market is shifting. If home sellers want to get in while the market is still hot, it may make more sense to sell now - rather than waiting until 2023 - over the next year the mortgage rate could spike by another half a point, knocking more home buyers out of the market - and inflation/recession pricing could limit their spending even further. 

For Further Reading

• Will You Lose Money if You Buy a House Right Now?
• How Much Do You Lose Selling a House As-Is? And More