Happy month of February! I hope your 2023 is off to a good start. Is buying or selling a home one of your goals this year? If you have questions about the market, simply reply to this email. It comes directly to me. I’ll do my best to answer your questions. If a question applies to others, I may share it here in future monthly newsletters.
Q: Is the real estate market still declining?
A: While we are not out of the woods yet, our anecdotal experience is that the worst may already be behind us. I know it is too early to call. I’m only reporting what we see in the market at the end of 2022 and the first month of 2023. Buyers are acclimating to the higher interest rates and uncertain economic data. Housing needs are real and immediate. Buyers who need and want to buy are returning to the market, now with less competition from other buyers. They feel less pressure and are becoming more picky. They are no longer willing to overpay for a house. They have to see the value that justifies the price.
Listings in desirable areas that are priced and presented well are still selling, sometimes quite fast! It’s the under-prepared, overpriced homes that are lingering on the market. A lot of price decrease in the market is the result of price adjustment of listings that were overpriced to start out with.
An investor-client asked an excellent question yesterday. He asked me why two listings that were similar and equally priced had such different outcomes. One had been on the market for almost two months, while the other went pending in 3 days. Among other factors, I pointed out that the one pending has a brand new roof, updated plumbing, electrical, and renovations throughout. The one that is still on the market needs to be updated, and since I cannot find any permit records for the last 19 years, it presumably has an old roof and A/C. So, just on the roof and AC alone, there is a perceived $20,000 value differential to a potential buyer. Therefore, the updated one sold in 3 days, while the other is still lingering on the market.
This is a great example of the market dynamic right now. It’s not a Seller’s Market because sellers cannot dictate their price and terms as they did in 2021 and the first half of 2022. They likely have to make concessions to make a deal work. It’s also not a Buyer’s Market because the inventory is still not high enough. We have several searches for our clients and our own interests. We are still waiting for suitable homes. One beautiful listing came on the market. It received a full-price, all-cash offer before our buyer even had a chance to see it. We called this “a tale of two markets” in the past. Some listings don’t sell, while others receive multiple offers. We see this when a market is in transition. And we’ve seen it quite a few times in the last 25 years.
In summary, we see a stable real estate market in central Florida because the demand is still strong. It is becoming an increasingly balanced market, which is a good thing. Again, buyers and sellers are on a more equal footing. In times like this, whom you choose to represent you can make a big difference. We recently got a buyer client under contract for a home at $100,000 below asking. Even though this result is unique, we always apply our concise analysis of each situation and skillful negotiation to maximize the advantage for our clients.
If you plan to buy or sell a home this year, feel free to contact us. We have transitioned our business to focus only on past clients and referrals. This way, we can spend more time focusing on each VIP client. This is what we enjoy. We hope to have the pleasure of working with you.
~Yien and Alysa Yao
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