A cardiologist in his early 30s has waited for more than five years for the right time to exit his rented city apartment. He dreams of buying a suburban house with a big, professional-level kitchen where he could pursue his passion for Italian cooking.
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But to date the timing has never seemed right to get a fair deal on the sort of spacious house he has in mind.
“During COVID, prices were ridiculous, and there were very few properties for sale. Buyers lined up around the block. I’m no fool, and I wasn’t going to compete with those crazed buyers with all their bidding wars,” the cardiologist says.
But in recent weeks more neighborhood markets have been cooling somewhat, giving a small degree of hope to determined homebuyers like the doctor. The statistics that give them the most hope involve the recent major increase in available inventory and the reduction in the number of home shoppers.
“The market is at an interesting point, with rising inventory and lower demand,” says Lawrence Yun, chief economist for the National Association of Realtors (nar.realtor).
Indeed, the number of available properties has grown by more than 36% within the last year. This is despite many current homeowners continuing to cling to low-rate mortgages they acquired through refinancing during the pandemic.
Will more supply of available properties temper home prices for prospective purchasers?
That depends on where you live and the level of inventory in your neck of the woods, according to real estate specialists.
Andy Walden, a vice president for Ice Mortgage Technology, a firm serving the home loan industry, anticipates slightly lower home prices in “pandemic boomtowns,” including those in Florida where inventory growth has been especially rapid. But he doesn’t foresee major price drops in most parts of the country.
That view is shared by Shaun Donovan, a former secretary of the U.S. Department of Housing and Urban Development, who notes that overall housing demand still greatly outstrips supply throughout the nation. He says that’s created a housing affordability crisis, particularly for would-be entry level purchasers.
Still, impatient wannabe homeowners, like the cardiologist seeking a house with a big kitchen, are refusing to wait on the sidelines any longer to make their first purchase.
“To heck with all the prognostications about price levels. I just want one great house, and I’m tired of putting my plans on hold. All I’m asking for is a fair deal, and I’m ready to go,” he says.
Here are a few pointers for buyers:
-- Consider listings that have been sitting unsold for a lengthy period.
Stale listings, which have been on a market longer than the average for the neighborhood “can be a treasure trove of good values,” says Stephen Carpenter-Israel, the president of a real estate firm affiliated with the National Association of Exclusive Buyer Agents (naeba.org).
As Carpenter-Israel says, the surprising reality is that there are stale listings in even the most popular neighborhoods -- because some sellers overprice their listings.
But he cautions that selling times can vary widely depending on the popularity of a community and the local economy.
“Look at each home individually and find out its listing history. It may be the home was listed with a different agent before and then later relisted with a new agent. Because of that, you may need to dig to determine how long it’s really been up for sale,” he says.
Sid Davis, a real estate broker and the author of “A Survival Guide for Buying a Home,” says that even after a series of price reductions, an initially overpriced home typically retains its stigma, which continues to drive away potential buyers.
“People get suspicious of the house that sits around. They wonder if there’s something seriously wrong with it,” Davis says.
Attentive buyers realize that among shopworn properties there can be prime bargaining opportunities -- even in an area where inventory levels are tight. This is especially likely if the owners are under pressure to move.
-- Educate yourself on values in your target community.
To navigate any market skillfully, you need to inform yourself about property values in the area where you’re searching.
Very often, the owners of a stale property will ratchet down the price in incremental drops. The key for a prospective bidder is to know when the sellers are approaching a realistic price point.
“You and your agent need to do a thorough analysis of the area so you’ll have a good feel for the true value of any house you like,” Davis says.
The key to determining market value is to closely examine the data on recently closed home sales of similar properties -- known as “comparables.”
“Make sure your agent shows you very recent comps that are really similar to the house you want to buy,” Davis says.
“When deciding how much to bid on a stale listing, don’t focus on the list price. Instead, orient your offer to what the market is really paying for that kind of a house in that neighborhood,” Davis says.
-- Make sure you’re alerted when price drops occur.
Have you found a home that’s appealing but believe it’s significantly overpriced?
If so, Carpenter-Israel suggests you track that property closely, waiting for its owners to take a price cut that brings it closer to its true market value.
To stay alert to potential pricing changes for the property of your choice, Carpenter-Israel recommends you ask your real estate agent to keep you constantly updated by email or text.
“Ideally, you should be kept informed on a daily basis,” Carpenter-Israel says.
(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)