(CHEROKEE LAKE REALTY WRITES A WEEKLY COLUMN FOR THE GRAINGER COUNTY JOURNAL NEWSPAPER. THIS WAS A RECENT QUESTION ASKED BY A READER.)
I would tend to agree with what you’ve been told. Somewhat. A “buyer’s market” is when there are more properties for sale and they exceed buyers’ demand. Buyers may be skittish because they see that interest rates are higher, driving up mortgage payments. The national economy is sluggish, perhaps affecting job security. Global affairs create fear. In today’s global economy, the national economy is also impacted. Case in point is what is happening in Iran now, which has driven up diesel/gas prices. So, buyers are just kind of hanging out waiting for things to get better. Hopefully. As I like to say, we don’t have a crystal ball, sometimes they get better, sometimes they get worse.
A “seller’s market” is just the opposite. Buyers outnumber available homes for sale. Things are hunky dory. Buyers are grabbing up homes, creating a demand for housing. Sellers do not have to negotiate much on the sales price. There are folks standing in line to make offers.
Now, why did I write “somewhat” earlier? Well, as an example, when the COVID-19 pandemic arrived in late 2019-2020, we thought the last thing on folk’s minds was to purchase a home. Guess what, we were wrong. From 2020 through the end of the pandemic in 2023, we experienced a “seller’s market.” Older adults were offered or chose early retirement due to a mix of health risks, financial shifts, and major changes in the workplace. Many were allowed to work from home, so they chose to relocate to places like Tennessee, which offered a lower cost of living than California for example. As the demand for housing ramped up nationwide, rising home values increased the net worth of older workers, allowing them financial confidence to sell their homes and purchase another one.
Today, the pandemic threat is not what it was. Life has returned to normal. Almost. But many sellers still expect to get the same demand and high prices that existed a few years ago. They have not adjusted their expectations. Also, when the pandemic demand was prevalent a good number of sellers did not put their homes on the market, therefore inventory was low. Their concern was that if they sold, they would have a difficult time purchasing a home at a lower price. Well, a lot of times, you can’t have your cake and eat it too. You can’t expect to get a bunch of money for your home in a prevailing market and then turn around and not give a bunch of money for someone else’s home. So now that homes are found at lower prices, sometimes, sellers are listing their homes, expecting to find a good deal on their next home. But the challenge is that many sellers still want the high sales prices we saw during the pandemic. And interest rates have gone back up. In 2021 they hit a low of 2.65%. The national average today for a standard 30-year fixed home loan is approximately 7.27%. The lower rate allowed families to qualify for a more affordable home loan. Hence, there was more demand for housing. My advice to sellers and buyers? Due to a lack of column space, I will answer this in next week’s column.
