By Chad Taylor, the Taylor-Made Team
If you are selling a home right now and wondering where all the buyers went, you are probably not imagining it. A few months ago, your neighbor may have put their home on the market, had a dozen showings in a weekend, received multiple offers and sold above asking price. Maybe the buyer even agreed to take the home as-is.
Now your home is on the market. The phone is quieter. Showings are more spread out. Buyers seem interested, but not urgent. They notice things your neighbor’s buyers apparently didn’t care about. And instead of asking what they need to do to win the house, they may be asking what you are willing to do for them.
It can be incredibly frustrating for a seller. But I don’t think the explanation is as simple as mortgage rates. In fact, we probably give interest rates too much credit when the market is good and too much blame when it slows down.
The buyers changed.
I have watched this seasonal shift play out for years. The buyers who enter the market in the spring generally know exactly what they are getting themselves into. They expect competition. They know another buyer may be standing in the kitchen while they are walking through the backyard. They understand that if they like a home on Saturday, they may need to make a decision before Sunday night.
And, frankly, a lot of those buyers like to compete. They like to win. Once buyers know several other people want the same home, the psychology changes. The question can quickly move from, “Is this the right house for us?” to, “What do we need to do to get this house?”
Those are the buyers who can push prices higher. They may be more willing to overlook condition issues, limit what they ask for during inspections or, in some cases, purchase a home as-is. Everything moves faster because the buyers move faster.
Then we get into late summer, fall and winter, and the personality of the market begins to change. There are typically fewer buyers, but just as importantly, the buyers who remain tend to behave differently.
They have more time. They may visit a home twice. They compare it to the other three homes they have seen. They think about the age of the roof. They notice the bathroom that hasn’t been updated. They start calculating what new windows might cost.
And when there isn’t another buyer breathing down their neck, they are far more likely to negotiate. That change in behavior eventually shows up in the numbers.
In Johnson County, the average home took about 52 days to sell in January. By June, that number had fallen to about 29 days. In August, it had moved back up to approximately 35 days.
The percentage of asking price sellers received tells a similar story. Sellers received an average of 99.2% of list price in January. That climbed to 101.9% in May, before settling back to 100.7% in August.
That doesn’t mean something suddenly went wrong with the housing market. It means the pace changed.
And this is where things can get especially difficult for sellers. Real estate is one of the few markets where we tend to look backward to determine what something should be worth today.
Your neighbor sold three months ago for $750,000, so naturally you think your similar home should sell for at least $750,000. That makes perfect sense.
But your neighbor may have sold into a very different behavioral market. Their buyer may have been competing against four other people. Your buyer may be the only person who has toured your home this week.
Same neighborhood. Similar house. Different market.
That is why sellers sometimes feel as though the market moved underneath them.
And today’s buyers are dealing with more than the normal seasonal transition. Mortgage rates remain a meaningful affordability challenge. Families are still feeling the effects of inflation. They are surrounded by economic uncertainty, wars overseas, political tumult and a seemingly endless supply of headlines telling them what they should be worried about next.
Fatigue may be an understatement. Most of those things are completely outside a buyer’s control, but they still influence how confident people feel about making one of the largest financial decisions of their lives.
A fatigued buyer doesn’t necessarily stop buying. They may simply become more careful.
They take another day to think. They stay closer to their budget. They are less likely to overlook deferred maintenance. They may decide that paying another $25,000 just because someone else wants the house isn’t worth it.
And collectively, thousands of those individual decisions become the market.
That is why I am hesitant to blame every shift in housing on mortgage rates. Rates absolutely matter. They affect purchasing power and monthly payments. But they are only one ingredient.
Housing markets are also driven by inventory, seasonality, affordability and, perhaps most importantly, human behavior.
For sellers, that means the sale down the street from three months ago is valuable information, but it is not a promise. The market that buyer competed in may not be the market you are selling into today.
That doesn’t necessarily mean you need to panic or slash your price. It does mean you have to pay attention to what today’s buyers are telling you.
Because sometimes the house hasn’t changed.
The buyers have.
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