The Covid Frenzy Market is Over! Pricing is the Key!

Mark Phillips Real Estate Leave a Comment

I think it’s probably a universally accepted opinion that the real estate market surged to places most of us never dreamed of during the covid pandemic. Prices were skyrocketing at a pace that was clearly not sustainable, buyers were being out-bid on almost every listing, sales prices were almost always above asking price and most listings received multiple offers with many of them having not only ridiculously over the top offers, but also very favorable terms for sellers such as free leasebacks, buyers picking up the tab on traditional seller closing costs (title policies, etc.) and more. On top of all of this, interest rates were incredibly low, so therefore the buyer pool increased substantially as well during the pandemic.

If we are being honest with ourselves, the above-mentioned conditions were simply not sustainable. I had heard some market “experts” that predicted there was no end in sight to the housing frenzy and some went as far as stating it could last 10 plus years. I heard this and was like, “Come on, it’s hard enough to predict what is going to happen in 6 months in a real estate market, much less a year!” As the saying goes, “All good things must come to an end” and to be honest, I am hesitant to declare that the covid housing frenzy a good thing, as prices were being artificially inflated due to the near panic that set in that went something like, “If I don’t buy now, I may never be able to.” It was getting ridiculous. As a primary listing broker, I literally could not keep up with the amount of offers that were flowing in on each of my listings for two years straight. Something had to give. The pace could not remain in the long run.

Now that the covid-frenzy is over in the real estate market, we are seeing a slowdown in sales activity and in prices increases as well. Interest rates are now nearly double what they were and have therefore caused the buyer pool to shrink. Some sellers seem to get it and have realized we are no longer in the covid-crazy market, while others still think that as long as you throw a for sale sign up in the yard, they can sit back and watch the offers roll in. This is no longer the case!

For the first time in many years, pricing a home to sell is so very critical. Gone are the days of setting a sales price well over market value and expecting it to actually sell. We all had been spoiled for so long in the housing market for years (sellers, I mean) with the ability to push asking prices to the limit and still receive multiple offers.

The good news is most home owners have made plenty of equity in their homes (assuming they bought their homes over 3 years ago). If an owner really wanted to maximize their equity, then yes, they probably should have sold 6-12 months ago before interest rates started to hike, however it’s impossible to predict or time the market.

The key for sellers now is to price their homes realistically rather overprice them with the fantasy of multiple offers flowing in. It’s not happening any longer. Those days are over. As a real estate agent, it’s part of our job to be transparent with our clients about a realistic value rather than taking an overpriced listing knowing it’s not going to sell and therefore giving our clients a false sense of hope. I would rather pass on taking an overpriced listing in this market rather than taking the listing knowing I will be asking the sellers to reduce their price over and over again until it sells.

At the end of the day, the ultimate decision on what to ask for a property is indeed the owner’s decision. No doubt about that, however if the seller wants to ask a price that is clearly outside of what the market will accept, I prefer to politely decline the listing as I feel it’s setting an owner up for disappointment when it sits on the market and doesn’t sell. One exception to this would be if the owners agreed to lower their asking price after a short period (two weeks max) after little to no activity.

In conclusion, the housing market has shifted and the pendulum has swung from a seller’s market to more of a neutral market. Days on market (how long it takes to sell a home) are starting to increase and will probably continue for the near future. Don’t be surprised to see 75-100 days on market as opposed to the 1-15 days we experienced during covid and also be on the lookout for more price reductions; something we haven’t really seen for quite some time. Low interest rates and the covid-frenzy were both outliers the last several years. Many sellers benefited by maximizing their equity, while some buyers probably overpaid, but felt they had no choice. The bottom line now is to not be greedy when pricing your home if you want to actually sell.

Hill Country Flat Fee Realty proudly serves the communities of Boerne, Fair Oaks Ranch, San Antonio, Austin, Dripping Springs, Blanco, Round Rock, Cedar Park, Georgetown, Leander, Kerrville, Fredericksburg, Bulverde, Spring Branch, New Braunfels and Comfort. Our flat fee model that saves sellers a ton of cash and is simply the smarter way to sell a property these days. Simply put, there is no need to pay high commissions these days to sell your property…save the money, after all-it’s yours!

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Mark Phillips

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