The housing market oscillates between being a “buyer’s market,” where the buyer has a stronger negotiating position, and a “seller’s market,” where the seller is in a stronger position to exact favorable terms from a prospective buyer; sometimes the difference in bargaining power is more extreme than others. Over the last year, the market has been extremely favorable to sellers; low mortgage rates, low housing inventory, and sky-high demand all combined to place the seller in the driver’s seat. As the global economy recovers, the housing market should stabilize as well; the “buyer’s market” is on the horizon; many experts believe this will happen in 2022.
It cannot be denied that the rate of growth in housing prices hasn’t been seen since the 1980s. According to the National Association of Realtors (“NAR”), homes are regularly selling above list price; in May 2021, homes were on the market for an average of 17 days (30-days on the market is a proxy for a “buyer’s market”). While materials for new construction have become less expensive, and new construction itself has increased, the construction must be completed before it can have any impact on the market itself; we are still months away from new construction catching up to the increased demand for homes that the Millennial demographic has introduced.
Homeowners who are considering selling should do so sooner, rather than later, if they want to capitalize on favorable market conditions. Conversely, buyers should wait until 2022 if they are able. To be clear, the market has been cooling, and will continue to do so, but that does not mean that housing prices are set to drop drastically; real estate has always (with a few exceptions) been a strong investment.
At the Chernov Team we understand that knowledge is power, and knowledge of how negotiating leverage shifts is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.