What does the January market report mean for buyers, sellers and realtors?

In December we began to see signs of the slowing real estate market in Northern Michigan with really just a hint of increasing days on the market, lower sales transactions, and slowing price increases. If December was a gentle bit of change, January came charging in like a bull in a China shop and made it clear we are experiencing a significant market shift.

Keep in mind it’s the off season in terms of volume up here in the great white north, so the percentages aren’t super relevant because we are dealing with such a small number of transactions. In fact, the percentages are so whacky I won’t repeat them here (you can find them in the graphics on Instagram and Facebook). The trends are still very much relevant though, and here is what we saw in Northern Michigan:

·      Declining home unit sales across markets

·      Declining home values

·      Declining number of new listings

·      Increasing number of days on the market

·      Fewer numbers of homes sold at or above list price

·      Increasing number of price drops and expired listings

We often talk about the real estate market being strong or weak in terms of what is happening with price because we think about it in terms of how an investor would, by value of the asset (AKA prices). However, when it comes to your personal situation, the health of the real estate market is in the eye of the beholder. Here’s a quick take on what it means for various clients and partners:

What it Means for Sellers

We would still consider this a seller’s market. Sellers are playing with house money with the incredible amount of equity gained as prices rocketed higher in the last five years. But you can expect it take longer to sell your home and a greater emphasis on setting the right price. Expect more negotiation on price and through the time you go under contract and start working toward close.

What it Means for Buyers

As Kelly Clarkson once belted to a beautiful melody, some buyers have waited a lifetime for a moment like this. Or something like that.

Ok, that may be an exaggeration.

I don’t think we can call this a buyer’s market yet, but if you have been patiently waiting for your time to come it might be here. Sellers who are selling in this new market are listing because they want or need to live somewhere else. Almost everyone trying to be speculative in the hot market has cashed out or has been pretty much sidelined now with interest rate and recession concerns. Your sellers who remain want to work to put a deal together which will still allow them to tap equity but will get them moving on down the road to what’s next. They are much more likely to negotiate and put a win-win deal together.  

Bankers and Appraisers

Your mortgage lender is going to be excited to hear from you. Purchase volume and units are declining and they mostly work on commission. They may have to get more creative as banks tend to tighten credit policy in recessionary environments. Good ones will find a way to get good deals done at a fair price and will also be talking to you about programs to help alleviate concern about higher interest rates. Appraisers will remain dedicated to ferreting out true values but are likely going to be working off slightly different home comparables so they are going to have to work pretty hard on those reports (they always have in any market). We might see a few more appraisals falling a little short in the more competitive situations.

Realtors

Some realtors who are established in the business and have a process for marketing and client relationships will work a little harder but will still do well in a changing market (ahem…like the Winslow Group and Coldwell Banker Schmidt teams). Other realtors who had some big wins during a very strange market and didn’t plan well financially or do the regular blocking and tackling required to build a business will struggle or get out of the business. Be very nervous about working with a desperate realtor. Even your old high school buddy might be tempted to weak negotiation tactics which aren’t in your best interest or high-pressure sales tricks to get a deal on the books and some money in the checking account. We call that “having commission breath” and it can be dangerous. Make sure you work with a trusted professional, preferably one who has navigated a down market before.

The Bottom Line

Most importantly? Do not fear. When sellers are motivated and buyers are motivated, we call that normal. There is still a surplus of motivated buyers and inventory is low which will continue to serve to motivate sellers too. We are here to help bring buyers and sellers together while smoothing the process for both. We aren’t scared of the changing market and we have minty, fresh “do what is right for the client” breath. Call or message us today to put us to work for you. By the way, if you are a realtor and you need some help and coaching through this market transition, Winslow Group is hiring. We would love to hear from you too.