The red-hot housing market is showing its first signs of cooling, and the balance of power between buyers and sellers has begun to shift.
Sales of existing homes fell 2.9 percent in midsummer, according to the National Association of Realtors, and brokers in many areas report that the number of houses on the market is beginning to rise. The result: Buyers are regaining some of their negotiating power and sellers are being forced to lower their sights after years of hefty price increases.
To be sure, home sales traditionally slow during the summer months as families turn their attention to vacations and the coming school year. But the heated spring selling season may have set the stage for a fall slowdown. “There’s some indication we’re in a transition period … from a seller’s market to a buyer’s market,” said Tom Kunz, president of Century 21 Real Estate Corp., a unit of Cendant Corp.
And some real estate experts say the recent rise in inventories goes beyond the normal summer slowdown, with more sellers trying to cash out with big gains and more buyers nervous about overpaying at a market peak.
The apparent shift in the market’s tenor follows a frenzied spring and summer, when anxious buyers – fearing they would get priced out by rising interest rates – jumped into the market.
Still, home sales are expected to reach record levels in 2004 for the fourth consecutive year. And with mortgage rates again hovering just below 6 percent, according to HSH Associates, purchases could spurt again this fall. Indeed, some markets haven’t yet seen a shift.
But elsewhere, there are signs the market is changing. One Orange County broker recently offered “a bonus of $2,500, champagne, roses, chocolates, mini vacation” plus the chance to win $10,000 to the agent who sells a penthouse condo in San Clemente priced at $1,225,000. The property has been listed for more than 60 days. “When something is on the market that long, you just take action to try and get it sold,” said Marilyn Taylor, a broker-associate with Century 21 O.M.A., which is handling the property.
Even Las Vegas, where prices increased by more than 52 percent over the past 12 months, is showing signs of cooling. The supply of homes on the market climbed to about four months in August, based on the current rate of sales, from a slim 1.7 months in January, said Lee Barrett, president of the Greater Las Vegas Association of Realtors. One reason for the increase in properties on the market: Owners who bought properties as an investment last year are cashing in. “Buyers now have an opportunity to look at a product without it selling in hours, and make an intelligent purchase,” Barrett said.
The recent rise in inventories in some of the hottest markets could be a taste of things to come. Mortgage rates are likely to reach 6.25 percent by year end, said David Lereah, chief economist of the National Association of Realtors. He expects home sales to fall about 5 percent next year.
The rise in inventory is good news for home buyers, who face less competition for choice properties. “You still hear of multiple offers, but they are the exception rather than the rule,” said Michael Turk, managing broker at Weichert Realtors in Alexandria, Va., where one house attracted a stunning 42 offers in May. Another sign of how things are changing: More buyers are opting for a home inspection. In the spring, many passed up an inspection because it could have reduced the chance of getting their offer accepted, Turk said.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
