Why Some Homes Sell in a Week and Others Sit for Months

Pricing a home is much more complicated than simply looking at what your neighbor’s house sold for. Even professional appraisers using the same comparables will often come to differing valuations. Rarely is there one clear price a home should be priced at but instead a range. Typically it is either more of a buyer’s market or a seller’s market which helps guide which end of the price range you should price your home. However, we are in an almost unprecedented market right now. There is very low inventory and there are also very few buyers. This is creating a more balanced market in some ways but is also creating some unique challenges when it comes to pricing a home for sale. In the last year I have observed with my own listings and with the listings of other really good agents, homes that seem well priced and are in good condition taking months to sell. Others of my listings are going under contract in the first week - I had one that sold for almost $100,000 more than a very recent appraisal!

Here is what I think is happening:

The market is in a different place than when I began practicing real estate - right as the market was starting to recover from the recession. In our area, in early 2013, prices had dropped incredibly low due to the glut of foreclosures and short sales precipitated by risky lending practices. Builders got out of the business and proportionately to historic levels very few homes have been built since.

The pandemic and insanely low interest rates brought on a buying frenzy in our area starting in 2020 driving up prices. For the first time in history, we also have more of the older generations keeping their larger homes and not downsizing as many people often did at retirement. On top of low inventory, you have many people who have a mortgage interest rate around 3%. Because of this, homeowners are making do with the homes they have often renovating them rather than moving. If they do have to move, many people are keeping their home and using it as a rental property rather than selling it ( We Have to Move - Should We Sell Our Home or Hold Onto it for Rental Property? ). Athens/Oconee area has a high demand for housing due to UGA and the two hospital systems. All these factors have led to home prices rising significantly (around 90%) since 2019. Even as interest rates have more than doubled, currently home prices in general are not going down. Home prices are just not rising at the rates they have for the past 5 years.

At the same time we have scarce housing inventory, we now have very few buyers looking for homes. The higher prices coupled with the higher interest rates are keeping many first time homebuyers out of the market all together. More people are living with relatives or renting with roommates.

As mentioned above, many homeowners are not wanting to leave their low interest rates to get the next-sized house. There has also been a mental shift when it comes to interest rates. For the first few years when rates rose to 6%-7%, the common wisdom from most lenders and financial experts was that this was just for a few years. The strategy was that sellers could entice buyers with a two-year rate buydown with buyers figuring they could refinance in a few years. Crazy bidding wars were still in recent memory so many buyers were just happy to be able to get a home with an actual inspection period. With inflation continuing to rise, it doesn’t look like rates are going to be coming down anytime soon. People need to be comfortable with their payment at the current interest rates. Higher home prices combined with higher interest rates is giving lots of buyers sticker shock. Buyers are taking their time and being particular before they put an offer on a home. They are expecting homes to be in great condition - if their monthly payment is already stretching their housing budget, they don’t have money to do costly repairs.

So where does this leave us while we figure out how to best price your home?

The key is to strike the right balance between making sure not to leave money on the table while still ensuring your house isn’t over priced so it will sell on a good timetable.

The specific strategies will of course depend on your unique home and situation, but understanding the market and its almost unprecedented lack in our area of both supply and demand is essential. This is why a one-size-fits-all approach to pricing just doesn't work right now. Every home and every seller's situation is different, and that's exactly why I love sitting down with current and potential clients to discuss a pricing strategy together. If you're thinking about selling, or just curious what your home might be worth in this market, let's talk. Please feel free to reach out anytime.