I recently read an article in which twelve experts were asked to share their market predictions. Each of the twelve "experts" had different answers. Twelve different opinions on how far real estate values would fall, if at all. Twelve different opinions on how long it would take to recover, how high inflation would go and of course, where interest rates are headed.
This has led me to believe that no one really knows what’s going to happen. I mean let's face it, we've never been "here" before. And by "here" I mean recovering from the sudden and complete shutdown of almost every sector of the worldwide economy due to Covid-19. So, I thought I would share what I'm actually seeing and experiencing in the real estate market on Kauai.
Sellers:
For the most part, Sellers are holding. I've seen a few price adjustments, but they remain limited to properties that were overpriced from the outset. Our inventory of homes and condos remains incredibly low, which is allowing pricing to remain pretty close to where it was six months ago. It is still a good time to sell. I have seen concessions on the part of Sellers recently. With the sudden absence of competing offers, some Sellers are realizing if they want to sell, they need to be flexible and more willing to negotiate with ready, willing and able Buyers. I have also seen more homes sitting on the market longer. These are primarily homes that need renovation, updating or repair and are overpriced based on their condition or location.
Basically, it feels like we are back to a more normal market. Homes and condos remain in demand. The Buyers are here, and they are looking. But they have become much more particular. They are not buying “as-is” or waiving contingencies any longer. They don’t need to. A word of advice for Sellers: This is not the time to “test the market” with an inflated price. Your home will sit on the market unless it’s truly one-of-a-kind and in great condition. So, spruce the place up a bit, declutter, clean, and improve your curb appeal, and you will sell while values are still high.
Buyers:
As I mentioned above, Buyers are still buying. In fact, I’m being contacted by Buyers every day. But many Buyers have grown complacent due to the lack of selection. The urgency to buy has faded and their willingness to accept a home with issues has almost disappeared. With interest rates over 6%, Buyers who can, are willing to wait for the right home at the right price.
The good news for Buyers is that time is on your side. Recent reporting on inflation has been mostly positive. Some experts are predicting a decline in interest rates by March. You won’t face extreme pressure from competing Buyers any longer, or unreasonable demands from Sellers. Although interest rates are higher, they are still acceptable compared to the historic highs of the past. So, take heart, and don’t give up. You will find the home you are looking for in time. Be ready with an up-to-date pre-qualification letter from your lender, no older than 30 days. If you need to free up some cash to buy, start planning. Sellers are still hesitant to accept an offer that is contingent on the sale of another property.
In conclusion, both Buyers and Sellers need to realize its not a Buyer’s market yet, and not a Seller’s market any longer. We are in transition. Unreasonable demands from either side will not fly. Cooperation is key to getting what you want, whether you are a Seller or a Buyer. Cooperation, and of course, an experienced agent who has your best interests at heart.
