I was having dinner with friends recently when I heard someone in the restaurant we were dining in mention they are going to wait to buy a home until the housing market crashes. It’s easy to understand why some may have a belief that this is going to happen soon. After all, many news articles lately have been using phrases like, “next housing market crisis” or “markets are cooling down quickly” and “housing market burst” and bubbles, and all sorts of scary phrases that are beginning to make people second guess whether they should sell or buy a home now, or wait.
At the end of the day, no one can predict the absolute future of the housing market for the remainder of this year or the next, but what I’d like to do is tell you what I, and Jose Medina & Associates have been seeing over the past few months for Stark County and Summit County, Ohio, real estate sales.
First, we do not think a housing market crash is definite. The last housing crash in 2008 resulted from lenders issuing loans to buyers that had a high risk of defaulting on their loan, rising home prices, and an increase in subprime mortgages (Investopedia). These same factors have not been relevant to the trends we’ve seen over the past five years.
Instead, what we have seen across the nation is a decrease in inventory and an increase in buyers, causing the average sale price to increase greatly (up 40%, since 2017, in Stark County and Summit County). The buyers winning bids on the hottest properties were many times cash buyers or conventional buyers. These buyers bought a home and had immediate equity and their financial credibility was strong, making it less likely for them to lose their home, even in today’s economy.
Graph shows the Number of Active Listings from January to July of 2017-2022, versus the Average Sale Price of homes during the same time frame, for Stark County and Summit County, Ohio. The green line indicates the Number of Active Listings and the blue line indicates the Average Sale Price. Stats provided by MLS Now.
Graph shows the Average Sale Price for a home from January 2017 - June 2022, versus the Close Price to List Price Ratio for Stark County and Summit County, OH. Stats provided by MLS Now.
The crash talk we are seeing in today's news, however, is being fueled by factors that have caused the housing market around the nation to cool down some, including here in Stark County and Summit County. This market shift has been caused by inflation, a doubling of interest rates, and an unsustainable increase in housing prices. What we’ve been seeing within the past few months has been subtle, but home prices that were going up, up, up, in 2020 and 2021, have plateaued and the top, top dollar amount buyers may have been willing to pay last year, is not necessarily the same today.
That’s not to say I’m still not getting full price offers or offers over asking price, but it’s not happening at the frequency I’ve seen over the past few years. Sellers are, however, still getting close to asking price in most circumstances.
In addition, there may not be as many showings on a home and a home may take a week or two to sell, instead of the first day it's on the market. So it’s still a healthy market, but it seems to be gradually shifting more in the direction of a balanced market, where offers are more reasonable (not way over asking price) and sellers are accepting these offers. Homes also aren’t necessarily selling right away but they also aren’t becoming stale and sitting on the market for months.
What Does Today’s Real Estate Market Mean for Sellers
If you have been thinking about selling your home but have been considering waiting, it is still a great market to sell in!
I’ve worked with clients over the past few years who were absolutely shocked by the amount of offers they received and the terms being offered. It’s been a wild, fun ride for them as they received more for their home than they ever imagined. That real estate world has shifted, so do not be alarmed if you do not receive the same type of offers your neighbor, friends or family did 6 months ago when they sold their home.
Be prepared to adjust your price if you aren’t getting showings or offers, and there may not be a bidding war with multiple offers for your home. Inventory is still lower however, so that doesn’t mean you are going to get low offers - you just may not get the top, top dollar that we’ve seen over the past few years.
What Does Today’s Real Estate Market Mean for Buyers
If you’ve been thinking about buying a home but have considered waiting until a recession occurs, you may want to consider that a housing market crash is likely not going to happen under the current economic conditions. You may be thinking that prices are going to drop dramatically toward the end of 2022 or in 2023, but the housing inventory is still low.
Graph shows the Number of Active Listings from January to July of 2017-2022 for Stark County and Summit County, Ohio. Stats provided by MLS Now.
You may also not be competing with as many buyers when you find a home you love, because the current economic conditions will turn some buyers away and cause them to wait. In addition, interest rates for a house will likely continue to rise, so waiting to buy may lead to a higher house payment, depending on how much the Fed raises rates over the remainder of this year and next.
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Overall, it’s impossible to predict the future or real estate market trends, but I do hope the information above provides insight based on what I and Jose Medina & Associates have been seeing over the past few months being in the field daily. As an expert in the real estate market for Stark County and Summit County, be sure that if the market changes drastically, I will be ready to provide you with more updates so you can stay informed!
If you’re thinking of selling and would like to know the value of your home, you can receive a free home valuation as a starting point to help you understand the value of your home.
If you would like to learn more about buying a home, specifically related to the process and what housing market prices are for the areas you desire to live in, feel free to contact me.
I look forward to helping you!
