The US real estate market is in a seemingly paradoxical state, where transactions are quiet but home prices continue to rise…
Illustration photo – Photo: Bloomberg.
According to CNN, this situation reflects the stalemate between buyers and sellers, with both sides having different expectations and not willing to compromise. Many homeowners in the US still have high expectations from the boom period, while buyers are increasingly cautious due to rising borrowing costs.
Many homeowners who have secured low-interest mortgages during the pandemic are reluctant to sell their homes to buy a new one because they would have to take out a new mortgage with a higher interest rate, said Daryl Fairweather, chief economist at Redfin. So they are willing to wait longer to get the price they want to sell, or not sell at all rather than reduce the price.
Data from the Intercontinental Exchange shows that in September, 80% of the US real estate market saw home prices increase, the highest rate since the beginning of the year, especially in cities in the Northeast and Midwest.
As buyers and sellers are unable to “match orders,” the number of canceled sales contracts is increasing. According to a report by Redfin, about 56,000 home sales agreements in the US, equivalent to a rate of 15%, were canceled in August, the highest level ever recorded for that month of the year.
Many home viewings are where deals fall apart, because the buyer asks the seller to pay for repairs or make additional concessions, but the seller refuses.
Sellers willing to lower their prices are the ones who can make a deal happen, said Angie Guillette, a Florida real estate broker. But many sellers are opting to exit the market rather than lower their prices, which has kept home prices high.
Heather Anschuetz, a real estate broker in Tennessee, finds buyers are also more willing to walk away from deals now than they were before, in part because their budgets will be strained by monthly mortgage payments.
Yasmin Asberry’s near-successful home sale in suburban Dallas is an example of how buyers and sellers can’t find common ground in today’s U.S. real estate market, and deals only succeed when one party gives in.
At first, Ms. Asberry thought selling a house in the area would be a simple task. But the house she listed for $400,000, in line with the average price of houses in the area, fell into a slump. “I thought there would be a lot of interest and I would sell quickly, but there was very little interest,” she told CNN.
Ms. Asberry then added new furniture, reposted better photos, and lowered the price to $385,000, then $365,000, before finally getting an offer. “If that doesn’t sell the house, I’ll wait until next spring to put it back on the market,” she said.
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