The real estate market is shifting, how will you be affected?

Rates are higher, inventory is still low, buyer fatigue is kicking in and we are seeing sellers dropping their prices at the 2nd highest level we have seen in the last 7 years between 2015 and 2022. Meaning sellers are lowering their prices to match the buyer’s expectations.

Hi I’m John Herman of PropertyUp and I have been helping clients sell and buy homes in the Northwest suburbs of Chicago for 18 years now.

The real estate market is starting to shift and it’s good news for everyone because the pace we have been going through was unsustainable. Just imagine you are on a plane and you are on take-off and climbing non-stop, for the whole trip… that would make doing anything on that plane difficult…

Well, our Real Estate Market has had sustained annual price appreciation over the last 122 consecutive months and has been the longest-running streak on record including the past 2 years of unheard-of increases being 40%. The plane needs to level off as this has lead us to BUYER FATIGUE. To give you an example of this I recently placed an offer with my buyer clients and the home received over 40 offers. The buyer fatigue is showing up as buyers miss out on home after home. Google is now reporting Leading indicators of homebuying activity: Fewer people searched for “homes for sale” on Google—searches at the end of May were down 13% from a year earlier. Also, pending sales are down for the six straight months and are still down 26.9% for the year.

Another area where the inventory is low is the foreclosure market. Foreclosures have averaged about 290,000 homes a year between 2017 and 2019, however in 2019 we had 129,000 and in 2021 we had a very very low 38,000 foreclosures, I will address foreclosures in depth later this year.

We are finally starting to see inventory increase and we saw a 9% increase of homes going on the market for sale. Even with this additional inventory Nearly 9 out of 10 homes that are being listed are now selling within 30 days or less.

Further evidence of the Real Estate Market shift is that Price drops that are happening right now with the 2nd highest amount of price drops in the past 7 years even with the very low inventory we have. I think we will continue to see price drops as the market continues to adjust and the level of the peak.

On the mortgage front, there is an increasing number of buyers who are opting for the 5 or 10-year arms that have lower interest rates and will adjust at the end of the arm to hedge the current interest rates we are experiencing.

Remember a Real Estate Market shift is expected after having 10 full years of monthly appreciation, the plane needs to level off or it might run out of gas. Just remember to sit back and enjoy the ride and make sure to like and subscribe if you found this video educational and helpful.

Again my name is John Herman of PropertyUp and I look forward to assisting you in the very near future, make it a great day!