Tag Archive for: Seller’s Market

When Buyers Get More Realistic

Homebuyers, 2023 may be your year! There’s no guarantee next year will welcome a buyer’s market, but recent indicators are trending in that direction. Though properties are still moving for sellers in our market, they need to be priced right and there must be an element of enticement for prospective buyers, such as its location or curb appeal. Buyers can start getting down to business. They can deal with the market at their own pace and with very little pressure.

Some never caved to outside influences, especially those who could be patient and didn’t need to purchase a home. The winds in our market are shifting. Yes, inventory is bleak, scarcer than it was only three years ago. In July of 2019, 1,387 active listings sat on the market, this past July only a fraction of that – 553 listings – down 60%. And even less today with 532 residential listings currently active.* Many professionals in the industry thought the housing supply would recover by now, but that remains to be seen. Furthermore, the national supply is up year-over-year, over a 30% increase, the largest jump since 2017.

So where is this shift occurring? First, buyers are beginning to see the housing shortage disappear (at least on a large scale). Secondly, there’s a seasonal shift to buying and selling, this is traditional and it’s obvious, it’s “back to school” and it’s the onset of the autumn season, but it’s also temporal. Next, the pool of buyers has dwindled in recent months, placing more tension back upon the sellers. Buyers have faced climbing interest rates since the beginning of the year when they hovered near 3%. Though recent weeks have seen decreases to the mortgage rates, they currently sit around 5.5-5.6%. Buyer as well as sellers have been affected by these increases. Finally, buyers are regaining the upper hand over sellers. Now, they’re looking back to contingencies and leaning on them when signing sales agreements. When competition was fierce between buyers for over two years, this rarely happened.

“It’s certainly a breath of fresh air,” explains Ann E. Cappellini, Associate Broker for Realty Network Group. “There’s a stronger sense of hope for those looking to buy a home, though obstacles still remain.” Buyers can get more realistic nowadays. As long as they have the means financially, the way is less burdensome. With less resistance, homebuyers can use contingencies, such as home inspections to weigh their options, if and when sizable issues present themselves.

When the financial risks of an escrow deposit arise, it’s in the buyer’s best interests they utilize inspections, mortgage and/or appraisal contingencies. According to Redfin, escrow is a legal arrangement where typically a third party will temporarily hold the buyer’s deposit (often used as a down payment or toward their closing costs) until the deal is consummated. In Pennsylvania, the listing Brokerage will generally hold the earnest money deposit (not a neutral third party), though this isn’t always the case. “Escrow matters in Pennsylvania, like many other states, are held in strict compliance with the Real Estate Licensing & Registration Act (RELRA) and the state’s agreement of sale, which has been formulated by the Pennsylvania Association of REALTORS® (PAR),” emphasizes Cappellini. “During the homebuying escrow period of a sale, though the deposit might be held in the listing agency’s escrow account, the money may not be commingled with other funds and furthermore not released to either party, if the Broker is in receipt of a verifiable written notice that there’s a dispute over those funds and it’s subject to mediation or litigation.” Escrow is a serious matter in real estate, especially in our state, and as such, RELRA and PAR specifically outline how earnest money is to be handled from the beginning to the end of all transactions.

Yes, contingencies can kill a transaction and they certainly impact a deal, but they’re in place to protect buyers. These protections are good for both parties, even though it doesn’t always appear so for sellers. Perhaps a deal goes south due to one of the clauses employed by the buyer. It doesn’t go as expected and the buyer is able to receive their deposit monies back. On the flip side, if it’s understood that all the contingencies are met and the buyer walks away or defaults on the deal, the seller might be entitled to the deposit and can also sue for specific performance. Whether you’re a buyer or seller, make sure to discuss with your REALTOR® how contingencies in a real estate transaction can impact you. You’ll be glad you did!

Three Reasons To Purchase A Home

The later part of this year might bring about some stabilization in the way of a more balanced market, but don’t expect one favoring buyers anytime soon. As inventory shortages continue, and they will, prospective homebuyers are attempting to determine if they should stay in the game. Others have doubts and aren’t sure if they should join the quest for homeownership either.

The anticipation of homeownership can be intoxicating for some. Recent months have been a prime example of this in our region of Northeastern Pennsylvania. With homes sold on par with the previous year (843 versus 853, respectively)*, and inventory struggling to see the light of day (1.29 month’s supply),* there’s an element of hysteria to real estate transactions these days. Certainly the pandemic was a catalyst for the surge in activity, but make no mistake about it, our housing supply had already been depleted prior to 2020.

Before we reveal why now is a good time to buy, there are a couple reasons we caution some to re-evaluate their situation before purchasing a home. These reasons include those facing upheaval in their lives, those who must remain nomadic for the sake of their job as well as anyone who struggles to cover their monthly expenses. If your life is a little frantic today and you’re going through transitions, purchasing a home might not be the best course of action. If you’ve undergone more change than you care to admit, renting may provide you more freedom and less stress. It’s also favorable for those who need to move promptly due to work. Homeownership can only create headaches for these successful itinerant types, who could potentially sit on the sidelines waiting longer than expected for their home to sell. Finally, owning a home comes with maintenance, presumably a mortgage, taxes, insurance and occasionally other fees/costs. If you presently grapple with covering your expenses and debt, purchasing a home isn’t a path you should pursue until your situation changes for the better.

Obviously, renting in particular situations just makes sense! Doesn’t a seller’s market, the likes of 2022, qualify as one of those instances? Not necessarily. In fact, since the “lockdown dam” ruptured in June of 2020, rents have been rising too.

Yes, glaring issues in our economy such as inflation, the increasing costs for food/gas, among others, create barriers to buying (we can’t minimize them), but opportunities exist for those looking to enter the market, especially for the first time. They remain even in the midst of a supply shortage.

Homebuyers, now is the perfect time to pursue homeownership, especially if you don’t need to sell and your rental rates are continuing to climb. Purchasing property is advantageous, and in the majority of cases, will be the smarter play over leasing. Here are the top three reasons why purchasing a home (or likewise, continuing to own one) now makes sense.

Stability

Because the landscape for buying and selling is more volatile recently, having a meticulous plan of approach is essential. Before you commit to taking on a mortgage, understand your finances and prepare them appropriately. The first step toward investing in your future in real estate is stability. If you’re grounded in your finances, with trace amounts of bad debt in your name, and you have the ability to afford a home at a particular price point in addition to the closing costs that are associated with it, you’re in a good position to invest. If you have a nest egg or emergency fund, you’re in a superb position. Of course, having excellent credit gives you a competitive advantage and firmer stability still.

You’ve Been Squandering Your Extra Money

If you’re looking for safer places to store your loot, you should strongly consider building equity by purchasing a home. Homeownership forces you to produce equity. On the other hand, renting makes it easier to spend your extra cash rather than invest it. The money you’re putting into a home will come back to you as your property appreciates over time. In 2021, we witnessed homes appreciate by roughly 19% and they should sustain 5-10% through year’s end. Housing appreciation in the Greater Scranton area registers 13.1%, year-over-year for the April.* According to the latest numbers from CoreLogic from March, homes have appreciated by 20.9%, year-over-year. It’s a great time to make an investment in a home!

Feel At Home

As a result of owning property, you can create something that’s truly yours. Would you like to renovate? You can. [Make sure to check with your local municipality/borough first.] Want a bigger say in lifestyle decisions? Make them for yourself and your family. Need increased privacy? You’re in the driver’s seat. You can make additions to your property to make it more secure. You can erect shrubs and fences. Alter the landscaping or design of your residence, because you can – you’re captain of this ship. Don’t worry about the logistics! Homeownership means less restrictions and limitations and more freedom.

Why not own a place you can call home, when it’s all said and done? As a prospective homebuyer, especially a first-time one, you have the ability to invest in your family and create a foundation to build on, for their stability too. What’s more, homeownership statistically creates a better environment for children. There are many intangibles produced when a child has a safe and affordable place to live. Furthermore, homeownership drives your local economy and has the potential to enhance your community. For every two home sales, one job is generated, increasing economic mobility

If you’re looking for housing, don’t give up hope. Our region might be slightly oversaturated with buyers, but that continues to improve. What we can expect six months from now is anyone’s guess, but we’re approaching a more balanced market in the months ahead. At the moment, it’s a great time to buy, and if you’re in the position to do so, will you take the steps necessary to join those who find homeownership very rewarding?

* statistics from the Greater Scranton Board of REALTORS®