Happy New Year! 

There is no doubt that 2023 could be a new world for buyers and sellers. We all know the main reason for our new reality is the effect of interest rate increases on the housing market. Fortunately, we have a lot of cushion to work with thanks to the rapid appreciation and transaction frenzy that 2020 – 2022 brought. We realize that the market we had recently was temporary, and not sustainable, but look below what it has done to help our sellers.

Using the following criteria in a comparison to 2019 and 2022 sales:

• Closed 
• Residential Detached Single Family
• 3-4 bedroom
• 2-3 bath
• No mobile homes
• Price range $150,000 - $1,000,000
• 2019 vs. 2022 numbers

These numbers compare the number of transactions, price per square foot, and average sales price in 2019 vs. 2022. Keep in mind that the interest rate increases began in 2022 so there is already a "slowdown" baked into the 2022 numbers. But, the increases are incredible. On average in these major Baldwin County cities, our clients and customers have enjoyed a 37% increase in their home values since the beginning of 2020. 

I'm not telling you anything new, but it is important that you are armed with some good statistics when you are working with your sellers. In real dollar terms, for some pricing examples, following is an average value increase:


 

In a Google search for "real estate prices dropping," you can get the following headlines:

• Housing correction coming to Alabama
• Is the housing market about to crash?
• Where are home prices dropping the fastest?
• The Housing Market Is Worse Than You Think
• Collapse in home prices is coming, experts say
• Home prices are falling at the fastest rate in 15 years.

The headlines are spooking some sellers that are considering going on the market. And, the headlines are prompting buyers to get into a wait and see mode. I get it. If I was putting money on it, I would bet it is more likely that home prices will fall 5% in 2023 rather than increase 5% in 2023. Who knows? We are definitely in the midst of a market transition, but we all know that transactions will continue. Fortunately for our sellers, we have room to make a transition. In early 2022, if we were to provide our sellers an offer  37% higher than their current value for a closing in January 2023, we would have had a large handful of takers.   

This is all really good news. Our sellers have record real estate equity today. It may take longer to sell today, but the market is armed with the ammunition to work a deal. Most sellers today can lower their asking prices without being under water. Most sellers can provide a rate buydown for their buyers without going upside down on their mortgage.   Compare that to 2007 – 2011 when a price reduction very possibly moved the transaction into a "Short Sale" condition (and for you 'newbies' to the business, if you want to know about the nightmare of "Short Sales", give me a call. They are not pleasant!).  

Our market is in a great place. We continue to be a destination. We have an increasing inventory for buyer choice. The vast majority of sellers are financially healthy. We need to focus on reality, read the headlines with a grain of salt, and maintain our composure. Know your market and be the trusted real estate authority that your clients need. And, when it comes to seller stubbornness to meet the market where it is, they and you have plenty of ammunition to make a deal work.