Our Next Market will be a Balanced Market
One thing is for sure: real estate is never boring! That is even more true here in the Great Smoky Mountain market where second homes and investment properties, meaning cabins, mix up what one might think of as a more normal residential market. Even though vacation cabins here are considered residential property, the fact that they can make money for the people who own them makes them more valuable than homes where their owners are using them as their primary residence.
As we wrap up the end of 2022, we should move past the season of seller domination and we should see the early arrival of a balanced market, although probably not totally consistent. It is still possible to have very high prices on “special, one of a kind, upscale” homes without the sort of competition that could adjust the price. But for a more average property we should see the high appreciation settle from last year’s 7% to somewhere closer to 2.8% as we enter 2023.
What is a Balanced Market?
We’ve all heard the terms seller’s market and buyer’s market. A balanced market can be described as one in which the sellers are able to win some and the buyers are able to meet their wish list, too. The last market saw multiple offers, no inspections, no repairs, appraisal gap clauses, escalation clauses, sight unseen contracts on properties within the first week of being listed. Many agents were listing the property with deadlines for how long offers would be accepted. These expectations should become rare as we move into the next season of real estate. Buyers will again be able inspect and request a reasonable list of repairs. However, sellers will be able to say no to a list that means a total remodel.
Buyers should once again be able to shop and have the time to check out the options before making a final decision. Those coming from out of state might even be able to again write a contingency that would allow them to travel to “view” the property before fully committing.
There are still a few "no no's" for buyers:
1. No low ball offers, unless you know there are some significant repair issues that you are prepared to address after you close. You’ll want to include these expectations in your offer so have the list ready for your agent to share. Remember, once you submit a low ball offer on a house that you are really interested in buying you have most likely offended the seller to the point that they will be stubborn to negotiate any reasonable concession for you.
2. Do not go see 40 houses hoping that one will give you the confidence to buy it. Write down your priorities in a property and stick to your top 10. When a property meets the top four, slow down and seriously consider it! If you find yourself comparing other homes to one you’ve already seen and are thinking of buying, you don’t really need to look for anything else. Go ahead and make the offer on the one you can’t stop comparing the others to.
A few "dont's" for sellers:
4. Don’t overprice but don’t overcorrect with price slashing, either. It is going to take 2-3 times longer to sell a house in a balanced market. This is normal. Nothing is wrong with your house, your cabin, your agent, or the buyers!
With all that in mind, it should be a much “saner” 2023 for buyers and seller! Personally, I am really looking forward to it!
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