It's a new year and the prognosis for local real estate is decent, all things considered. As far as I can tell our banks are strong, and lending practices over the last decade have been largely well regulated. It is unlikely that we will have a mortgage crisis like we had in 2008-09.
The interest rates have risen enough to eliminate marginal buyers and that has taken the edge off the market. The days of 10 offers on day one of the new listing are mostly gone. But locally our inventory remains tight enough that the market still favors sellers. The median sold price has come down some 10% over the last 8 months, but that is almost certainly due to the loss of all those multiple offers over asking. The median was puffed up during 2020-21 with sellers routinely getting 5-15% over asking in those crazy bidding wars.
Today a well priced home at market value will take 15-30 days to find an offer and the seller is likely to get very near asking or perhaps a smidgen higher if the buyer needs a little help with the mortgage costs. Sellers should be prepared to get offers near asking on a properly priced home with the buyer asking for closing cost help. The higher rates have made it impossible for some people to qualify for a loan that they would have qualified for a year ago. But lenders can arrange for a buy down of the interest rate that lowers the payment and thus allows some buyers to qualify. many buyers do not have the money up front however to pay for that. Sellers should also allow a little extra time for offers. The old adage that "a bird in the hand is worth two in the bush" is very relevant right now. That is sage advice for sellers in 2023.
Creative offers and quality negotiations will keep our real estate market strong so long as we continue to produce jobs, and inventory remains tight. I am predicting a slow and gentle landing in the market in 2023 again operating under the presumption that no major outside economic disaster intervenes.
Buyers and sellers should see a much more calm and frankly pleasant experience looking for and negotiating purchases this year than they did a year ago. Buyers should take note that lenders are going to tighten up a bit on underwriting. They may be a little more picky with documentation and that is typical in a market that is slowing. Remember that in 99% of the cases, the lender is taking on the vast majority of risk as buyers typically put down 20% or less when buying a home. The bank is the one with their tail in the wind, so as the market tightens so will they.
I look forward to a much less busy but still prosperous real estate market in the coming year.