Success can be yours in 2023 By Nedra Kanavel, Associate Broker, Idaho and Montana Since 2020, we’ve all wondered what’s going to happen with real estate. This year in particular, the most prevalent questions seem to be: Is the bottom about to fall out? Will interest rates come down? What will this summer’s selling season look like?
For myself, I’ve decided—expect the unexpected. I remember sitting in my home office in spring 2020, in a COVID-lockdown friendly state back East, being told by the governor that real estate agents were not essential. I certainly let fearful thoughts take over. Yet, late 2020 and 2021 surprised us all with an unprecedented real estate boom. Just spring of last year, as I watched hike after hike hit interest rates, I worried again. Would all the buyers disappear? Would no one want to sell? Here we are in spring of 2023, and sellers still need to sell and buyers need to buy.
Unpredictability seems to be the norm of our times. Real estate is no exception. As soon as some of the smartest, most qualified experts in our field predict one thing, forces totally out of their control bring about a completely different, illogical result. Buyers and sellers who embrace these concepts in 2023 will achieve what they want and enjoy taking those big steps toward their next goal:
Flexibility. We continue to have historically low inventory and at the same time the largest generation of potential home buyers. (Millennials, who are at prime home buying age, beat out Baby Boomers by about 20 million.) These two facts alone are allowing sellers to list and sell for much higher than they would have dreamed of pre-2020, giving them negotiating power.
On the other hand, buyers who are making offers now are going to great lengths to be able to afford the purchase. Until spring 2022, buyers could keep up with the rising prices, as long as interest rates remained very low (think 2.5 percent then vs. almost 7 percent now). When interest rates rose by almost 300 percent in less than a year, their purchasing power diminished dramatically. Some buyers left the market altogether and are still waiting for the “crash.” In circumstances like these, success for both buyers and sellers is still possible. I get to help people achieve these wins every day. I notice that the biggest winners are those who show flexibility when it comes to price, inspections and other terms of the contract.
Appreciation of current market data. For sellers, this means working with an agent who will show you detailed information about recent sales in your area. An appraiser will first adjust the value of your home based on square footage, outbuildings, condition, acreage, and appreciation/depreciation of the market in general. Be prepared that most appraisers are going to factor in that much of our residential local market depreciated by about 8 percent since 2022. (This doesn’t apply to niche markets like waterfront and resort.)
Don’t base your expectations on what something down the road sold for. You want to hit the market at a price that’s backed up by the same data other real estate professionals have access to.
For buyers, before you write that offer for $50,000 under the listing price, ask your agent to do detailed research on their end. Find out what comparable homes have actually sold for in the last three to six months. If the sellers have a great agent, they’re going to know what the market will pay for their home.
I love what I do, because underlying all of real estate are people who are creating the life they want or need. Whether it’s relocating, downsizing, growing your family or investing in your future, we all at some point need the real estate market to help us achieve that. Be prepared for uncertainty in some things, while also knowing that when you focus on your ultimate goals and the larger picture, you can and will win.