By Hazel Emlen
The housing market was off to quite a competitive start at the beginning of 2021. For many buyers, the competition made purchasing a home quite challenging. Some buyers have given up on purchasing a home altogether. From the stress of competing with cash buyers and buyers who waive most or even all contingencies, many first-time home buyers had an especially tough time fairing during the first half of the year.
But recently, the housing market has started to shift.
Of course, this depends on where you live. But here in California, I would say we’ve seen a definite shift in the market. Things have started to slow down a bit in certain price points, and the market seems to be cooling off.
It continues to be a seller’s market with limited inventory; however, some homes are shockingly… sitting. Sometimes homes are sitting long enough where there are price reductions. Or, in some cases, buyers can keep their contingencies in place and might also be able to negotiate things like repairs and credits. In a normal year, this kind of thing wouldn’t stand out, but in the market we’ve been in since 2020, the thought of buyers having any opportunity to negotiate has not been a reality.
Before you start thinking that your buyer clients are going to get a deal on a home, let me clarify: We’re only seeing a balancing in certain price points. For example, in the North Bay area of California, many real estate agents are finding that homes priced $550,000 or less are still experiencing a great deal of competition. For homes $550,000 and under—which is roughly the average price point in this market—I still prepare a buyer to be ready to compete with multiple offers and competitive terms. Homes that are priced more than $600,000 seem to be a different story. Now, unless there are upgrades and curb appeal, many homes at that price point and higher are not seeing as many offers. Of course, this is all dependent on the area.
There was a time just a few months ago when most homes could have 10 to 20 (or more) offers on them. We heard crazy stories about certain homes getting offers $100,000 or more over the asking price. But now, homes in these higher price points might only have maybe one to five offers on the table now, making it much less competitive. Sometimes these homes do not have any offers even after a couple of weeks. Again, in a normal year, this would not be anything unusual, but this is a welcome change for buyers after the market we’ve been in.
So, what is going on? And what does this mean for sellers—and for buyers?
For sellers, now more than ever it is vital to price the home accordingly. Although the inventory remains lower compared to years past, sellers who price their homes more appropriate to what the market in their area is calling for are seeing a better chance of receiving multiple offers with competitive terms. Those sellers who might choose to test the waters and price their home more aggressively could find themselves sitting, and ultimately coming down on the price.
I believe that this is still an excellent market for sellers to take advantage of. Things are just balancing out a bit more in some price points. It’s important for listing agents to have a realistic conversation with their clients on what is going on in their local market so they can make the best decision on how they price and prepare their home to be sold.
For buyers, this is an opportunity to be successful in this market! There is a combination of things at play here contributing to this shift. First, buyers are fatigued. The real estate market has been so wild since early 2020. Many buyers are just over the stress, disappointment, and time the home search is taking from their lives. On top of all that, we are still adjusting to the changes brought on by the pandemic. Our lives are returning to a new normal way of doing things. Travel and exploration are up across the country, kids are going back to school, and life is opening back up a bit more. Some people who put off selling their homes during the height of the pandemic are now pulling the trigger, or are planning to list in the near future.
Could this mean we passed the peak real estate market of 2021? Possibly so! Time will certainly tell if this lull is here to stay or not. My advice to buyers is to get out there and continue (or start) the search. For first-time buyers, this could be the perfect window of opportunity—and it’s up to us real estate pros to let them know the opportunity is finally there. The interest rates are still historically low, and the inventory seems to be picking up a little bit. This could be a great time for your clients—they may not have to compete with as many offers and you might get lucky and be able to negotiate.
The 2020-2021 real estate market has certainly been a roller coaster ride. We started in uncertain waters and went to straight madness in some areas. One thing is certain, however, life is returning to a new version of normal and 2021 is proving to be a much brighter year.
Hazel Emlen is a real estate agent with Rapisarda Real Estate in Vacaville, Calif. She was recently named a REALTOR® Magazine 30 Under 30 class of 2021 honoree. Emlen has been featured on “The American Dream,” a national TV show about lifestyle and real estate. In her spare time, Hazel also enjoys hosting her own podcast, “Real Life & Real Estate.”