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Key takeaways:
- Higher interest rates may spur more homeowners to list before buyers start to step away.
- Buyers opting for houses in need of repair will find larger, more affordable inventory.
- Home shoppers still want an all-white kitchen, home office and outdoor area, but the open plan has lost some cachet.
Real estate trends are usually best defined by what is happening locally rather than by generalizations that apply nationally. But when the scarcity of inventory—which started after the Great Recession—gradually took hold nationwide, it led to greater similarities from market to market.
More boomers have stayed put as they find it harder to find smaller, maintenance-free homes. Meanwhile, a large wave of buyers entered the market in 2020 and 2021, some were looking to take advantage of low interest rates for primary, secondary, or investment properties, and others were seeking more space as the pandemic made work possible from almost anywhere.
Regardless of price point, location or demographics, buyers have prioritized similar features, too. Many want move-in-ready homes in close to perfect condition, with white kitchens (despite the buzz about personalizing the room with color), a workspace or even two, and an outdoor area to breathe fresh air, enjoy a respite, and cook outdoors.
The great imbalance between supply and demand has also led more salespeople to become generalists rather than focus on one niche, such as new builds, luxury housing, ranches, farms, or equestrian properties. It’s also spurring real estate pros to get more creative.
Jon Singleton, a salesperson with Watson Realty Corp. in Jacksonville, Fla., says he and his colleagues have resorted to old-school tactics over the past year. They are hitting the pavement to talk to people who might sell if they had help finding a place to go or contractors to perform work if buyers bought the more readily available inventory of homes needing repairs.
As interest rates rise and more inventory becomes available, houses for sale are not receiving as many offers above the listing price as they did a year ago. Nationwide, existing-home sales decreased slightly by 2.4% in April compared to March, according to the National Association of REALTORS®’ latest housing report. And sales of existing homes are down 5.9% year over year. But markets are still competitive.
We asked seven salespeople in seven different cities to share a glimpse of their market and the tips they’re giving buyers and sellers. Here’s what they had to say.
Austin-Round Rock, Texas
State of the market: Many of my clients are Spanish-speaking or are international first-time home buyers looking for new houses. Because of the inventory shortage, homes get multiple offers (and higher ones), and there are waiting lists for new homes—even raffles for a chance to buy. Some new homes have gone $100,000 over the asking price. The median sales price for the Austin-Central Market area is up 30% to $476,700; the number of closings is down 4% due to lack of inventory; and the average time on the market is 25 days, down 12 days, according to December 2021 stats. The consensus is that the market will remain competitive, and prices will continue to increase, albeit more slowly.
Tips for buyers: Buyers can still persevere. Some weeks we have more available inventory. There are bidding wars, but I see this calming a bit. It could be due to interest rates or buyers bidding, losing out, getting tired and taking a break. I try to keep them in good spirits and get them preapproved and ready to make their best offer each time, especially as the market calms a bit.
Tips to sellers: Even if you live far away from the city, you still have a good shot at attracting multiple offers since more buyers are willing to move further out due to the scarcity of inventory.
Boston
State of the market: Even as more inventory starts to become available in my usual price range of $1.5 million to $2.5 million, I still hear buyers say, “This house isn’t perfect—let’s wait.” I think some of that is because of prices and some due to helicopter parents. And despite fixer-uppers costing less, many potential buyers have young children, work from home, and don’t have the capacity or money to do the work. But they also won’t compromise—even those who are burnt out from the process of making multiple offers and being turned down.
Tips for buyers: Put more money down to make a purchase happen; let the seller stay and rent back to you so they don’t feel as much pressure; make few or no contingencies; and compromise—buy on a busy road or go farther out.
Tips for sellers: Get buyers in the door with a reasonable price—the market will bring it up depending on supply and demand. In some areas, prices have risen by $200,000 to $300,000 over the asking. Even with an inventory shortage, prioritize curb appeal. The first showings take place online, and it’s clear from photos if you haven’t taken care of the inside, cleaned, or decluttered.
Charleston, W.V.
State of the market: We’ve never seen this kind of market. It’s always been slow and steady, and we trend two years behind the rest of the country. But since the pandemic, we’ve experienced some firsts: a shortage of inventory, use of escalation clauses, more multiple offers—sometimes five to six—and an influx of people coming from California, Colorado, New York and New Jersey. We’ve become known as “wild, wonderful West Virginia.” In 2018, we had more than 1,900 houses for sale in Charleston; in 2019, it dropped to 1,600; in 2020, to 1,300; in 2021, to 740; and as of January 2022, 521. Our median residential sales price in 2019 was a little more than $119,700; as of May 2022, it was up 45% to $173,750, and most homes sell in less than 30 days. I keep my ear out everywhere I go to find out who’s listing or prepping a house.
Tips for sellers: Don’t slack off, despite the sellers’ market. If it’s not priced right or in poor condition, the house will sit. Sellers should get their house in sale-ready condition by painting, doing repairs, and staging or decluttering. They will attract more buyers, get a higher price and have better terms.
Tips for buyers: Get preapproved versus prequalified to position yourselves for a solid offer—and know what terms will help. I work closely with my lender to help my clients get a house. Most of our houses were built in the 1960s and ’70s. However, many home shoppers want turnkey-ready or new construction, which can cost $400,000 or more. My advice is the same as others: Buy the worst house in the best neighborhood and fix it up.
Denver
State of the market: There’s a huge need for more inventory throughout the Denver market, which reflects one of the biggest supply-versus-demand disparities nationwide. We’ve become a choice destination due to our growing job market as well as our proximity to the mountains. The result is houses selling for 15% to 20% more than their listing prices in all areas and price points. Many potential sellers are hesitant to list because of how brutal the buying side can be.
Tips for buyers: Buyers willing to compromise and buy a house located on a busy street or near visible power lines will be more successful. Otherwise, buyers should expect at least five to six unsuccessful offers and an appraisal gap.
Tips for sellers: Don’t overprice, even as crazy as the market is, because if not priced right, it will sit. Set a sweet, competitive price that will get 10 to 15 offers.
Des Moines, Iowa
State of the market: New listings come on the market every day, but they sell quickly, sometimes in less than a day. We are back to bidding wars after they slowed last summer. It’s probably not as crazy as it is on the coasts. We don’t see people paying $100,000 over a listing price.
Tips for buyers: I’ve seen several deals fall through after the inspection due to buyers expecting perfection. That’s not the reality. Many buyers looking for a home in our area have never lived in a house. My advice for buyers is to get over the apartment mindset. They must understand that they might need to paint, put down new carpet, and do some repairs. However, many are too busy and want something move-in-ready. If that’s the case, then they’ll have to compromise to get a house in their price range. I might suggest a one- instead of a two-car garage, a half-bath instead of a full second bath, or an unfinished rather than finished basement if the rest of the house meets their criteria. I also recommend that they look outside their box—consider an ugly house with good bones and do a facelift. That way, they’ll get the look and features they want, and they’ll start building equity right away.
Tips for sellers: Add a home office if you can. Almost every buyer is looking for a home with extra space for an office—or two. It’s even more appealing if they’re located a distance apart so that sound isn’t an issue if two people are on Zoom calls at the same time.
Jacksonville, Fla.
State of the market: Our area attracts budget-minded home buyers from around the country. We’re seeing job growth in tech, finance and restaurant fields. Inventory dropped through the fall but has started to rebound. Most homes sell in the first week listed and usually for above asking. However, closing a deal is sometimes a challenge. Many inspectors aren’t experienced with our 1930s and ’40s housing inventory, and buyers bail without allowing the seller to make repairs. Also, many buyers don’t want an open-concept plan since they’ve realized there’s value in having separate spaces for privacy.
Tips for buyers: I try to help buyers understand that if they have any appetite for performing repairs, they can get a great deal. Their main objections are that a house is too far from family or doesn’t have enough room. Sometimes they’d rather pay more for what they like, so they have to understand that may be $100,000 more or 20% above list price.
Tip to sellers: Even in this market, a professionally prepared and marketed home will sell faster and for more money than one poorly presented with bad photos and incorrect listing information.
Seattle-Kirkland
State of the market: We’re on the east side of Lake Washington in Kirkland, which is primarily populated by two sets of buyers: those seeking large homes in the $3 million to $6 million range near their tech jobs, and those wanting smaller, more maintenance-free homes with walkability to town. Both groups want a view. There’s little inventory, and it’s not getting better. Since the first of the year, there’s been higher demand, and sale prices are up an average of 20% above list—sometimes 40%. We expect it to get worse for properties closer to the city.
Tips for buyers: Consult a contractor early in the home shopping process. Some buyers will pass on a quality home because bathrooms haven’t been updated, and they’re afraid they won’t find a contractor to do the job.
Tip to sellers: Physical rather than virtual staging prevents disappointment when buyers view a house in person. If a home looks better online than it does in person, buyers often walk. Sellers should stage to get the best price even in this market or consult a stager on how to arrange furniture. The result will be a higher price. They also need to take care of deferred maintenance.
What Home Trends Buyers Want Most
- Austin-Round Rock, Texas: First-time home buyers want to stop paying rent and own a piece of the American dream. They want affordability in the right location and right number of bedrooms for their family situation. —Inelda Brown
- Boston: White kitchen, attached garage due to winter, outdoor space and a larger home—usually with five bedrooms and four bathrooms. —Daryl Cohan
- Charleston, W.Va.: New mechanics, infrastructure, roof and a kitchen space to prepare meals together. Buyers from out of state want walkability and community-oriented locations. —Angela Mayfield
- Denver: Updated interior with open plan to socialize, a kitchen island, fresh paint, updated appliances, cabinets, flooring, backsplashes and a backyard. —Philip Kranefuss
- Des Moines, Iowa: White kitchen with granite or quartz countertops, a fenced-in yard for pets, good condition with three bedrooms, 1 1/2 to two bathrooms and a two-car garage. —Heather Wright
- Jacksonville, Fla.: Charm and character of the area’s older architecture, a front porch and a pool, since a new one is difficult to build. —Jon Singleton
- Seattle: Contemporary or modern farmhouse style (though the latter is fading), a modern layout, white kitchen, bright oak flooring, accent colors or wallpaper to break up a cookie-cutter design, bedrooms on one level, a garage and covered outdoor space. —Max Rombakh
