Home selling strategies and outlook as we head into 2024
| Strategically pricing your home for sale is always the key. This past week in Sarasota County, 46% of all single family homes for sale had price reductions, 30% is the norm. In July, the median list price for all homes for sale was $580,000. This week the median price of new listings was $550,000, a 5% drop since July, and the median list price of all listings, new and old was $537,000. The difference between prices of new listings , and new and old listings combined, a 2-3% spread, as slight as it may seem, is the difference between sold and not sold. The supply of homes for sale has been rising. It is not that prices are falling (although there has been a 5% weakness in the general market); rather, the expectations of too many sellers are not aligned with current market conditions. This has stalled sales, resulting in price reductions exceeding the norm. On average, homes sold at 93% of the original list price, 96% of the reduced final list price. The sooner a seller gets to a list price no greater than 3-4% above its reasonable value, the sooner it will sell. The longer it languishes on the market, the harder it will fall. Looking ahead to next year and economic conditions, how do you establish a realistic list price? Look to the Federal Reserve as a guidepost. The Federal Reserve shifted to a dovish posture this past week, sending a clear message on Wednesday of three interest rate cuts to the Fed Funds rate next year. The yield on the 10-year Treasury, which touched 5% merely 2-months ago, today hit a 5-month low of 3.9%. The 10-year yield moves on anticipation of the Fed Funds rate and anticipated economic conditions, bearing a direct correlation to mortgage rates. In concert, today the 30-year conventional fixed rate mortgage fell to the mid 6% range. The Fed’s comments support a positive outlook for 2024. The conservative expectation is the Fed’s forecast of three, quarter point cuts in the Federal Funds rate in 2024, will not fuel inflation. The Fed believes large cuts are not necessary to bolster the economy, which has been resilient, notwithstanding rapid rate increases since May 2022. Although mortgage rates are falling and inventory has increased with a softening in prices, challenges remain for homebuyers. Lower rates and a rising stock market will absorb inventory, prices will rise, but it will not be immediate. There remains an imbalance of supply and demand, not the least of which is because two-thirds of outstanding mortgages feature rates less than 4%, and over 90% are lower than 6%. Few homeowners will let go of such low rates. Rates would need to stay higher for a longer period than anticipated for supply to increase and lower prices. With the Fed’s messaging, there is no prospect for that occurring. Accordingly, I expect current market conditions will remain until the Fed Funds rate stabilizes at the coming new normal lower interest rate environment. Once rates stabilize, homebuyers and sellers will adjust to the new norm and prices will begin to rise. As I opined in my September 2023, Rob Report, “In a supply-constricted market, notwithstanding 7% + interest rates, there are more buyers than sellers. Buyers are more sensitive to the change in mortgage rates than the actual rate.” If your goal is to sell, my advice is to select your listing agent carefully. Adjust your list price to current market conditions based on real time statistics for your area and neighborhood. Pay attention to showings the first week on the market, and pivot quickly as the market dictates. The objective should be to meet the market as it is now and not the way it was. I have confidence that you can achieve your goals to sell in any market conditions, provided you have the necessary information. Tailored advice, data driven. As always, I am happy to help you navigate these turbulent times. There are always opportunities in every market. Wishing you and yours a Joyful Christmas and a Good New Year. |
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