By DON FENLEY
TRI-CITIES, Tenn. – Mid-year market reports that show all but the affordable market is on the threshold of balanced market conditions begs the question: where’s the new buyer bargaining power showing up?
The simple answer is monthly sales data shows an increasing number of sellers are discounting their price during negotiations. In June 53% of all sales were discounted in a market where sales demand has been lukewarm due to higher mortgage rates.
Discounts for more than 40% or more of all sales have been the norm since September last year. The highest share was in February when 56% when for a price below the listing price.
But the number of discounted sales is only half the story. While a larger number of buyers were getting discounts in May and June, the dollar amount ebbed lower than previous months.
June’s median discount was $10,000, and it was $11,900 in May. The month before, it was $18,898.
And while sellers are putting more on the table, they continue increasing listing prices. June’s median was an all-time high of $333,000. Since the median is the market mid-point half of the listing prices were for more than $333,000 and half were for less. So, what’s really happening is some sellers are just discounting from a higher listing prices. That helps explain when the median sales price is also at an all-time high.
Given current conditions, it’s unlikely the market will reach full balanced conditions any time soon. One thing that would increase the time frame is higher mortgage rates. That would continue dampening consumer demand and allow inventory to replenish.
Mortgage rate and home price forecast should be taken with a grain of salt. Uncertainty in the economy makes it very difficult to predict both.
Until then, the current sellers’ market still has legs.
Categories: REAL ESTATE