Home sellers and their agents often set a price based on comparable sales of similar homes nearby. But their house may not be worth what their neighbor’s house sold for just a few months ago.
“There are situations where past sales are higher than what one might reasonably expect right now,” said Corey Burr, real estate firm The Burr Group/TTR Sotheby’s, in Chevy Chase, Maryland.
The fluid change in home-selling prices now, compared to the previous trajectory of decidedly higher prices, makes it tough for sellers and agents to set the right price before going on the market.
“If listing agents rely too much on recent sales going back six to nine months, they might be a risk of mispricing properties on the high side,” Burr said. “Listing agents need to take into account the current situation.”
Burr said the D.C.-area housing market has slowed down precipitously — and he’s seen it himself. At this point last year, he had 11 home settlements scheduled for January. This year, he has three scheduled.
The number of homes for sale in the D.C. metro is currently about 40% shy of where it should be, he said.
The local housing market has seen a drop in sales, but homes are still selling, with many buyers making offers that are 10% less than the listing price.
More than 50% of houses are selling below asking price, though averaging only about 1% to 5% below. That may not be indicative of a long-term shift, considering this time of year is the slowest time for home sales.
“So the real litmus test of how sales prices will compare to list prices will take place in the strong spring market. That is where everything is going to become very clear for the rest of 2023,” Burr said.
Mortgage rates are expected to gradually ease in the coming months. The increase in mortgage rates since the start of 2022 has had the same impact on affordability for buyers as a 32% jump in home prices.
