If you want to sell, the next 12 to 24 months are critical—Here’s why.
A lot is going on in the real estate market. I just want to take a moment and update you on what’s happening today.
We’re finally starting to see the headlines that prices are falling, but our area has not been affected yet. Prices are still holding steady. However, we are seeing a record number of price drops in the market. Last month was a 400% year-over-year increase from August of 2021 in terms of the number of listings that had at least one price reduction during their sale.
A lot of that is because some agents and sellers, when pricing listings that are on the market today, are using old data. I always like to say that real estate agents are like fortunetellers, and appraisers are like historians. Appraisers can only look backward, and real estate agents are trying to predict something that hasn’t happened yet. So it’s really important to understand the market that we’re going into and not just what happened in the past, because without understanding where we’re going, we’re going to miss the mark.
However, if you were thinking about selling your home within the next 12 to 24 months, it is undoubtedly in your best interest to do it now. The reason is once prices start falling and more headlines start coming out reporting that prices are falling, it generates fear among buyers, and buyers are already dealing with high interest rates or higher comparatively (in reality, they’re not even back to historical averages yet). When they go from 3% to 6% within 12 months, it will be a big shock. With cooling demand because of interest rates, you will introduce fear into the market. What happens during those times is sellers who have been waiting on the fence to try to time the market to get the highest price for their home will realize that now is the time to list.
We will see a flood of inventory at the same time that we will see cooling demand, which will make prices go down. If you watched my previous videos, you understand how supply and demand works. That will likely happen within the the next 12 to 24 months, which is why if you are considering selling, you need to do it now to get the maximum value out of your home.
If you are selling and buying, you have a unique opportunity that only comes around once every market cycle. The last time this happened was about 2006. As a seller, you can still take advantage of record prices. You put your house on the market today, you get an offer, you go under contract, and after 30 or 60 days when you buy your next home, the prices will be lower theoretically. Third-quarter reports would have already come out to generate all this fear that I’m talking about, so you’ll have more options as a buyer, and homes will sell for lower prices. It’s one of those unique times in the market where you truly get the best of both worlds, which is why I’m putting this video that I haven’t done in a long time. This is absolutely an important time in our real estate cycle to take advantage of if you intend to sell within the next 12 to 24 months, even potentially 36 months. However, outside of this timeline, we really can’t predict.
The Federal Reserve is going to continue to raise interest rates until inflation starts to come down. It hasn’t worked yet, so they’re testing the limits on how high they need to go before it starts to take the desired effect. It’s anybody’s guess as to when that’s going to happen.
The cost of money is going to get more expensive, and buyers are going to have a harder time getting into homes because every 1% interest rate increase in their loan means they have 10% less buying power. I have graphs to illustrate that if you’re more interested in seeing how it works. It’s truly affecting not only the cost of the mortgage, but what type and how expensive of a home people can shop for right now.
If you’re one of these people who has been thinking about selling for a long time, it’s time to get off the fence. Reach out to me by calling or sending an email—let’s have a conversation and dive into your unique situation. I’ll help guide you through it!