Why a Normal Real Estate Market is Good for Everyone

The market has begun a shift. The MLS is showing price reductions, homes are sitting on the market a bit longer, and the Average Days on Market is more than ONE. These changes make many real estate agents uncomfortable because, well, because humans are born with instincts that tell us to pay attention when change is happening. Paying attention to change is a survival instinct that we are born with. That being said, change is not always bad. In fact, oftentimes change is good! Change is life!??

Most likely, for the next several months, we will all experience a changing market. There will be articles published letting us know that companies are laying off (like this week the article about Redfin and Compass layoffs), news articles about the return of higher inventory levels, and there will probably even be additional rate hikes to cool off inflation. While it's easy to interpret these events as if the sky were falling, it's important to remember that the market we experienced for the last 2 years was NOT a normal market. The last 2 years was the MOST UNUSUAL market I have seen in my 30-year real estate career. Therefore, we are not heading into an unusual market, we heading into a NORMAL MARKET.

Just in case you forgot all the reasons why a NORMAL MARKET is GREAT for you... here goes:

1. Higher Rates is Better Than Paying OVER Market Value: On a 500K loan, a borrower is now paying $700/mo more for their home than they would have paid 6 months ago because of the increase in rate. That being said, last year, customers were paying $550K (or more) for a $500,000 home. Now the buyer can pay $500K for a $500K home, WOW!?There's a good chance that today's buyer will also be able to refinance sometime in the next 6 years, which means they are better off with a higher payment than paying 10% over market value. ALSO the super low rates these past few years have caused most home owners to opt for the STANDARD DEDUCTION on their taxes because they didn't have enough deductions to itemize.?The biggest itemized expense for most homeowners is their mortgage.?The buyer may have to pay more in interest but there's a good chance that their income taxes may go down as their itemized deductions increase.

2. Most Sellers are Buyers - Most people who are selling real estate are also buying real estate. While sellers may not get offers over market value, they also won't have to PAY over market value on the next home.?Therefore, most sellers also will not lose greatly in a changing market.

3. Inspections - Remember the olden days when a buyer could actually make sure the house they were buying wasn't going to fall down in a few years.?Inspections are coming back. This is good for buyers. It's also good for agents and brokerages (it's also good for sellers too). Although there were millions of sales where buyers waived inspections, E&O carriers report a huge uptick in lawsuits these last few years.?Buyers didn't do inspections but when things went wrong after closing many sued the agent, the brokerage, and the seller.?Inspections are good for ALL PARTIES.

4. Agents Are More Valuable to Sellers in a Buyers Market - In a shifting market, it's so much harder for a seller to go it alone. They need agents more than ever.?An ad on Craiglist?won't sell the property.?It will take marketing, negotiating, and pricing to sell a home.?

5. Less Agents - There are over 3M licensed agents in the US and there are just over 5M annual homes sold. Too many real estate agents. Agents who are not committed to learning, working on their business, prospecting, doing open houses, talking to people, learning the market... those who are not committed to building a business will leave the business in the next 24 months leaving more opportunity for those who are committed to doing the hard work.??

6. Buyer's Choice - As the market normalizes, the buyers will be able to take a day to think about their home choices. Instead of having 1 house to choose from (with 3 hours to decide), they might have 20 houses to choose from.

7. Growing Your Business - For agents that want to tap into more ways of getting business, new avenues are about to open up.?Open Houses will be back in a big way. If you are newer to the business Open Houses are a great way to meet with and build rapport with buyers.?Expired Listings will be back.?Not every house sells in a normal market. Some sellers list high. Some agents don't market homes correctly. There are many reasons why homes don't sell in a normal market.?Expired Listings are an opportunity to call a seller and distinguish yourself as different from the last agent.

8. Closing Time - When interest rates were 2%, it was tough to close a deal within 60 days because banks, mortgage companies, and loan officers were tapped out of resources. Mortgage companies were doing 4-5x the volume they do in a normal market.?In a normal market, 30-day closings become possible because home buyers are no longer competing with refinancers.?

9. Sellers Still Sell - Sellers will still sell in a changing market. Job transfers, job loss, death, divorce, and change in family size - these are some of the reasons why people sell homes.?All of these things happen regardless of what is happening in a market.

10. Buyers Still Buy - It's always been the American Dream to buy a home. That will never change. If the pandemic taught us anything, it is that when the going gets tough in life, people place a value on the place they call home. Most people want to own a home - whether the rate is 1%, 5%, or 10% - home is the root of the family, the community, and our country, and thus we get the amazing opportunity to sell the ONE product that never goes out style - Homeownership.