What’s Going to Cool Off the Red-Hot Housing Market? I Know

Overpriced Homes, The Sequel??

One-one-thousand . . . two-one-thousand . . . three-one thousand.

If you’re a Realtor attuned to this Spring’s torrid housing market, you can practically hear it coming.

What, you ask?

No, not rising interest rates.

Contrary to everyone’s expectations (again), they’re been drifting back down, not spiking higher.

No, the phenomenon I’ve watching for is the next crop of would-be Sellers to (over)price their homes this Summer.

Emboldened Sellers

After being buffeted for months with breathless news accounts of multiple offers, not a few upcoming Sellers are under the mistaken impression that desperate Buyers will pay any price, for any home, regardless of condition.

So, they bump already stretched asking prices by another 10% or 15% — or 30% or 40%.

Result?

Their homes sit.

Supply Overhang

The more nimble, motivated Sellers will react quickly, and reduce their price to something closer to fair market value.

However, less realistic and/or motivated Sellers will simply sit tight.

Eventually, that dynamic creates an overhang of housing supply, as newer-to-market homes collide with the backlog of unsold homes.

The shift can take 6-8 months, but eventually what results is a more balanced market.

Which, as someone once remarked, “is a good thing.”

See, “Perils of Overpricing Even (Especially) in a Rising Market“; “The Fallacy of ‘Leaving Room to Negotiate’ (aka Overpricing)“; and “Perils of Overpricing.”



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