2023 is a seller’s market despite the predictions of it being a buyer’s market. However, the situation is more peculiar than it appears. It is a seller’s market simply because of the low housing inventory. Sellers don’t want to trade their 3% mortgage rate for the current rate of 7%.
Moreover, houses have a 45% higher price tag than in January 2020. Despite this, the median Days On Market (DOM) has reduced to just 48 days. This shows that the demand for homes is still quite high.
Will this trend continue as we move into 2024? Or will the market shift in favor of buyers? Read on to know the answers.
2023 Is a Seller’s Market
What Is a Seller’s Market?
When the demand for homes exceeds the supply, you enter a seller’s market. More buyers equals quicker sales. Sellers have all the negotiation power, and they control the prices.
Buyers compete with each other to make an offer that the seller can’t refuse. It often leads to bidding wars, which is profitable for sellers.
How to Make the Most of a Seller’s Market?
Market conditions impact who gets a better deal in a real estate transaction. However, the decisions taken by the seller and buyer in the process can also affect their bottom line. So, let’s explore some tips on how to navigate the seller’s market.
Tips for Sellers
If you plan to sell your house in 2023, these tips will help you get the most out of the favorable market conditions.
1. Select a Fair Price Tag
It may seem like a good idea to charge a higher price for your house in a seller’s market. However, it’s better to price it slightly lower than its appraised value. Since the demand is high, a slightly lower price attracts more buyers. This translates into more competition for your house, maybe even a bidding war.
2. Don’t Chase the Highest Offer
Buyers often make unrealistic offers to gain some time while they arrange funds. Whenever you receive such tempting offers, vet buyers carefully. Assess their financial stability and how likely they are to finalize the deal.
You should especially be wary of offers above the house’s appraised value, as banks usually don’t approve loans above a certain limit.
3. Check the Buyer’s Initial Mortgage Approval
For buyers who need financing, you must ensure they have initial mortgage approval from a lender. Since lenders verify the applicant’s financial strength, it’s an assurance that buyers can secure a mortgage to proceed with the purchase.
Tips for Buyers
Consider these points when you make an offer on your dream house:
1. Make All-Cash Offers
Sellers prefer all-cash offers to avoid mortgage-related issues and simplify the buying process. So, if you want them to consider your bid, offer to purchase the house in cash.
2. Get Initial Mortgage Approval
If you can’t make an all-cash offer, get pre-approved for a mortgage. It gives sellers the confidence that buyers can secure funds by the closing date.
3. Avoid Bidding Wars
Bidding increases a property’s price beyond its appraised value. It is an even bigger issue for buyers with mortgages. Since banks extend loans based on the house’s appraised value, the difference comes out of your pocket.
But you can avoid a bidding war if you make an all-cash offer. You can also drop some contingencies from the contract to make your bid more appealing.
Will 2024 Be a Buyer’s or Seller’s Market?
The rise in investment in bonds in October 2023 has slightly reduced interest rates. As a result, property prices will remain stable as we head into 2024.
Rising inflation and unemployment can prompt the Fed to cut rates even more. In March 2023, mortgage rates dropped to 6.42% after the Fed’s announcement. Subsequently, new mortgage applications went up by 17%. So, there’s a strong indication that 2024 will be a balanced market with some benefits for buyers.
What Is a Buyer’s Market?
In a buyer’s market, the housing inventory is higher than the number of interested buyers. Sellers compete to win these limited potential buyers. They often reduce prices to sell their homes quickly. This allows buyers to negotiate lower prices and get better terms like repairs, closing cost waivers, etc.
How to Make the Most of a Buyer’s Market?
A buyer’s market is perfect for aspiring homeowners to purchase a house. On the contrary, sellers swim against the stream. Let’s have a look at some tips you can use to navigate a buyer’s market.
Tips for Buyers
If you plan to buy a house in 2024, here’s how to get the best deals:
1. Don’t Rush to Make an Offer
Take your time before you make an offer, even if a house is within budget. Conduct careful inspections and evaluate houses on factors like neighborhood, amenities, etc. The more you know about the house, the better you can gauge its value.
2. Explore Comparable Properties
Comps or comparable properties are houses with similar attributes and market values. With comp analysis, you can assess if a home is overpriced and how much you can negotiate.
3. Consider Days on the Market
Before you make an offer, you must analyze how long the house has stayed on the market. You can negotiate a lower price if a home hasn’t found any takers for a long time.
Also, you can get the sellers of such houses to offer benefits like repairs, closing cost waivers, closing timeline extensions, etc.
Tips for Sellers
If you plan to sell your house in 2024, here are some important tips:
1. Repair and Reorganize the House
Buyers do thorough home inspections and can reject a house for a minor issue. So, make all necessary repairs, clean every corner, and ensure the property is in perfect condition for an open house.
You must also remove personal items from the staged room. It declutters the space and improves its appeal among buyers.
2. Put the Right Price Tag
It is important to price the house right in a competitive market. You can find the appropriate amount by analyzing comparable properties.
Ideally, you must price the house slightly lower than the average price of similar properties. Lower prices attract more buyers, and you benefit from more competition.
3. Focus on Marketing
Prospects seek photos of the house before open house requests. So, hire stagers and photographers to market your home in an attractive manner.
You can post these pictures on online real estate websites. You can also offer virtual tours and 3D walkaround videos as part of your marketing strategy.
How to Tell if It’s a Buyer’s or Seller’s Market?
We can determine the market’s nature based on the months’ supply, i.e., months it would take to sell the available house inventory at the current pace.
To calculate months’ supply, divide the total active listings by the homes sold last month.
The table below shows the relationship between months’ supply and real estate market type.
| Months Supply | Less than 5 | 5 to 6 | More than 7 |
| Market Type | Seller’s Market | Balanced Market | Buyer’s Market |
Since January 2023, the housing supply has revolved around the 3.0 mark.
Bottom Line
Despite high mortgage rates and low housing inventory, homes sell quickly because of high demand. That’s why 2023 is a seller’s market.
So, the best time to sell is right now. Turn to Houzeo, a flat-fee MLS listing service, to benefit from the pro-seller market.
For a fee of just $399, Houzeo gets you on the MLS within 24 hours. Your listing not only gets better visibility, but you also save on the Realtor commissions.
FAQs
When will the housing market become a buyer’s market?
The housing market is expected to become a buyer’s market in 2024. Mortgage rates are expected to fall below 6% due to the Fed policy and slow inflation. So, those who want to invest in new properties will list their homes to avail of low-rate mortgages.
What is the difference between a buyer’s and a seller's market?
A buyer’s market has many houses available for sale, but demand is low. Since sellers are at a disadvantage, it is the best time to buy a home. On the contrary, the seller’s market has a high demand for homes but a low supply.
Is it a buyer’s or seller’s market in 2023?
2023 has been a year of low house inventory and high mortgage rates. At the same time, listed houses have sold quickly because of high demand. That's why 2023 is a seller’s market.
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