What happened in 2022?
During the home buying boom of the pandemic, record low mortgage rates (less than 3%) fueled a buying spree like we’ve never seen before. Low mortgage rates created high demand which led to record low inventory, bidding wars, and rapid price appreciation – a phenomenon we knew wouldn’t last forever.
Then in about May 2022, things changed quickly as mortgage rates started to go up. Over the next several months, mortgage rates more than doubled – instantly softening buyer demand. In May 2022, home prices adjusted from their peak to compensate for the higher rates. As the year progressed, the interest rate shock started to wear off and buyers came back, but with less competition and more bargaining power.
What to Expect in 2023
“While 2022 may be remembered as a year of housing volatility, 2023 likely will become a year of long-lost normalcy returning to the market, . . . mortgage rates are expected to stabilize while home sales and prices moderate after recent highs . . .”
– The National Association of Realtors
Pricing Your Home in 2023
2023 home prices forecast: The California Association of Realtors forecasts that home prices will drop 8.8% next year. However, the suburbs are the main beneficiary of the flight from the cities which is why the Conejo Valley will likely outperform state averages in 2023. I believe the market correction has already happened in the Conejo Valley and home prices, at worst, will be flat in 2023.
Your asking price matters again
The days of negotiating up are gone for now. Buyers expect you to negotiate. Buyers are much more price cautious and have a mindset of offering below asking price – especially if the home has been on the market a while.
My Advice: Be conservative with your asking price. No one truly knows what a house is worth before putting it on the market, but we do typically have an idea of the price spectrum. You want to aim towards the lower end of that spectrum.
Your competition from other homes is small enough that even if your price is a little too low, you’re still likely to get bid up. However, many sellers make the mistake of overpricing their home. An overpriced home will sit on the market, and when a buyer sees a home has been on the market for a month or more, the inevitable price drop will be too late to create the opportunity that was missed in the first couple of weeks.
You need to be prepared to adjust to the market quickly
If your home isn’t getting many showings or worse, none at all, the market is probably telling you that you’re considerably overpriced. With such little competition, your home should get at least some interest from active buyers. If not, there’s likely a problem.
My Advice: Don’t fight the market. Adjust your price quickly if your house is being ignored. The longer on the market, the lower the offers typically are. And you’ll want to have a decent drop to make a difference. $10k is typically considered the minimum, but it depends on many factors.
Prepping and Showings
The condition of your home matters again
Over the last 2 years, the advice to sellers was – spend very little time and money getting your home ready to go on the market since it won’t make much difference anyway. Today’s buyers expect homes to be more move-in ready to offset the higher cost of the loan.
My Advice: You don’t need to do a full remodel, but you may want to put some money in some repairs or minor upgrades like paint and flooring. The more barriers and costs you can remove for buyers, the more likely they’ll make an offer.
Your home will get fewer showings
During the boom, we would often schedule all showings from Friday – Sunday, then respond to the countless offers by Monday. We knew that wouldn’t last forever. It’s going to take longer to sell your home today and that’s ok. The buyers are still there and more will come back as the year progresses. We’re fortunate to live in an area with high demand. A properly priced home will always sell eventually.
My Advice: Make your home easy to show. There will be fewer showings, but there are still plenty of motivated and eager buyers ready to go. You’ll want to avoid setting up unnecessary barriers to make showings difficult. Buyer’s are a little skittish these days. You want to make the experience feel right so they’ll move forward with an offer
You probably won’t get a full price offer
Yes, many homes will get full price offers and in some cases, multiple offers. However, that’s more the exception than the rule right now. Prepare yourself that you may even get some low ball offers. But an offer is almost always a good thing.
My Advice: Be patient. It may take some time to receive an offer, and when you do, the negotiation may take a few days too, especially if buyer and seller are far apart. Try to keep emotions in check and understand that you may have to drop your bottom line depending on the level of interest in your house. Even though inventory is low, buyers are still cautious. Many sellers have lost buyers during the negotiation only to end up selling for less a few months later.
Buyers expect seller concessions
Sellers had the luxury of calling most of the shots for the last couple of years. And buyers were more than happy to give in as long as they got the house in the end. Again, that was an unusual time. Nothing catastrophic has changed, we’re just back to the days of buyers expecting sellers to fix broken and safety items. And free seller rent backs are a thing of the past for now.
My Advice: Make sure your house is in great condition before you go on the market – buyers expect that now. Inevitably, something will come up in the inspection that the buyer will ask the seller to repair. Keep an open mind. Only the buyer has the right to cancel the sale during their contingency period.
The last thing you want is to risk going back on the market over relatively small items. Of course that doesn’t mean a seller should be inclined to renegotiate the price, but if the buyer is acting in good faith, keep your eye on the long term goal.
There’s certainly no need for sellers to panic. Demand is still relatively strong and will likely increase as the year progresses. Plus, low inventory will keep competition in check. It may take a month or two to find a buyer and you may not get your asking price. That’s not unusual. Getting 10 offers in a weekend well over asking price – that’s unusual!
Hi, I’m Michael
LOCAL REALTOR® | since 1999
I’ll help you explore your options to find out what’s best for you and your move.
And as a local Realtor®, I can help you market and sell your Conejo Valley home.
The process begins when we take the opportunity to discuss your specific needs, timing and expectations. My 20+ years of experience have proven that communication is the key to a successful transaction.