As an agent the biggest question buyers ask is, where are all the bargains? The last few months have been really difficult for buyers and sellers. For buyers, the banks keep moving the goalposts as to what people can borrow. The uncertainty is frustrating at best and being locked out from buying at worst. Sellers are unable to sell their properties because buyers cannot get finance and the media overly exaggerates the bargains buyers can grab.
Media outlets trot out the doom and gloom real estate news with as much consistency and sensationalism as in the boom times. Interestingly there are always villains in their reporting – agents, banks and greedy sellers. Well, the reality is very different but it is dull so reporting it won’t sell products in the commercial breaks.
The reality is markets are driven by supply and demand and environmental forces that have little to do with the individual behaviours of agents, banking CEOs, or residential property sellers. All consumers are experiencing higher prices so all are affected by interest rates – directly or indirectly. An economy reacts to changes and mass results are observed. Below is a general view of what is happening.
What is really happening
SQM Research has released its stock-on-market report for June, which revealed that listings nationally fell another 1.0% to be 6.2% lower year-on-year:
The decline was driven by new listings (less than 30 days), which fell 5.4% in June:
By contrast, old property listings (greater than 180 days) rose by 1.6%; although they are down 31.1% year-on-year:
Commenting on the result, SQM Research’s managing director, Louis Christopher, noted that vendors are less confident to list their homes amid falling prices. In contrast, older listings rose on softer buyer demand.
The other phenomenon I am seeing is that there are almost no sellers that are buying before they sell. This is because they know their property won’t sell quickly even if it would normally be considered highly desired. As outlined many properties are not staying on the market just because they are overpriced there are several reasons:
- buyers cannot get the same finance as six months ago;
- the approval might change for buyers mid request as interest rates increase monthly;
- finance is withdrawn before exchange and even settlement and
- many houses on the market for long stretches are in the ranges where finance is most sort.
Moving forward it appears this maybe our new norm where properties languish on the market until finance becomes more stable. What many would like to know is why real estate markets need to be so extreme. Contrary to media hype most if not all agents would prefer more consistency.
Finance that is not so easy we have runaway markets that agents are blamed for or finance that is so tight our clients are frustrated and thwarted. If there is a villain it is government policy pertaining to economic controls – why are interest rates the only instrument used?
So, to answer the question posited, the bargains are only going to be found where buyers are in distress as many homeowners just won’t sell at a loss. For buyers that want sellers to be realistic they need the ask what would they do if they were the sellers.