- Kerry Melcher is Head of Real Estate at Opendoor, an iBuying real estate company.
- If you’re trying to get a dream home at the lowest possible price, Melcher says there are several clues to look for.
- Keep an eye out for new listings with a better price per square foot, as well as the ease of booking a home visit.
After a year of record home prices and rising buyer demand in the United States, the housing market has started to show signs of slowing down across the country. But how can millions of hopeful buyers spot a potential chill in neighborhoods they’d like to buy – and plan their home search accordingly?
As the real estate manager at Opendoor, I stay on top of prices and fluctuations in the housing market. Market Cooling Panels go beyond your neighbors finally talking about more than their home buying problems. Here are three specific things to look for and what to do when you notice the signs.
Editor’s Note: Opendoor is an iBuying platform that buys and resells homes across the country.
1. You see more âfor saleâ signs in your neighborhood – and they don’t disappear overnight
In a dynamic seller’s market, the average number of days that homes are available on the market decreases. Remarkably, 89% of residential properties sold in less than a month in June 2021, up from 56% in 2019. Sellers also reported an average of four bids on their homes in June, double the number there. is only two years old – validating aspiring homebuyers who may have thought they imagined homes were selling overnight.
Looking to buy in a popular area? “For Sale” signs that hang around for more than a few days without a “sold” sign may indicate that a strong local seller’s market is starting to slow down. Now is a great time to browse the neighborhoods of your choice and visit a few available homes. The onset of a downturn is also a good time to check with your lender.
Let them know if your income or down payment plans have changed and discuss any rate adjustments that have taken place since your previous conversation. Make sure that any prequalifications you received during the height of a buying frenzy are still accurate so that you can adjust your research based on the numbers you and your lender feel comfortable with.
2. Homes are selling in the neighborhood’s current price range, rather than setting new records
A trio of low inventories, historically low mortgage rates and increased demand from buyers created a strong sellers market, pushing prices across the United States to continue to hit record highs this summer. Do you know at what prices houses are sold near or in the neighborhood of your choice?
It’s wise to keep a close eye on the local market so that you can spot potential cooling as the numbers change. Pay attention to the new active inventory. As prices start to normalize, you may see a new inventory listing at a better price per square foot than with homes that have been in place for more than 30 days.
When you notice prices changing, take some time to understand your ideal neighborhood – and surrounding neighborhoods – to familiarize yourself with the house’s features and relative prices. Buying often slows down considerably in November and December, which can cause some sellers to accept an offer they might otherwise consider low. If your schedule lines up, maybe now is a good time to be more aggressive with your offer. You may be able to buy even more homes than you initially thought possible!
3. You have much more choice in the accommodations available – and the time to visit them
Amid the hottest housing market we’ve seen in decades, the national active listings inventory fell by more than 50% in early 2021, leaving homebuyers with fewer homes to see in the spring and in summer. Cooling markets offer more choice, as well as more time for home buyers to visit a property before selling it. If there appears to be more accommodation available and it is noticeably easier to book a home visit, the local market may cool.
To get the most out of your research, be intentional in budgeting your time. You may still need to see multiple properties in a day, and it’s a good idea to give yourself at least an hour for each property (including travel time). During your visit, focus on the things that matter most: odors, condition of walls and floors, any issues with built-in appliances or systems (such as exposed wires or issues with the home’s HVAC system. ), unauthorized additions and the condition of the lawn. Knowing what questions to ask on a home visit will also help you stay focused and effectively appraise a potential property.
If you are in a good position to watch for signs of a market downturn and are expecting a lot, the best thing to do now is to make sure that you are financially prepared in the future to buy your dream home.
Kerry Melcher is the Head of Real Estate at Opendoor, a third generation real estate agent and longtime member of the local Phoenix real estate business community.