Buyers are out there but are more scupulous

I've had this conversation so many times in the last few weeks. You've likely seen it in your neighborhood where there are homes that are sitting for weeks that are perfectly fine homes and priced "right" but still not selling. Then you'll see other houses that had multiple offers and it's all a little dizzying. 

We have still very low inventory.

We have a burgenoning population of people that do and will need housing.

We have buyers who are still out there, despite the interest rates. They know the low low rates from two years ago are gone but they still need a house for various reasons. This is where the "need" to move group keeps trudging out in the market and the "maybe it would ne nice to have xyz" group of buyers have sat down.

Some agents are saying that it's a fickle market and hard to know what to expect but I think there is a ryhme and reason for this bilateral market and some homes are selling versus sitting. 

First, Who are the buyers out there: 

The buyers who are withstanding the interest rates and searching right now are "differenting". That's my term and not some fancy economics term. They are buyers who are downsizing, who've outgrown their current home, who need to move to a different area or those that becoming home owners for the first time because they realize it's not going to get "better" so they might as well jump in and start building equity.

Inventory woes:

Our market-wide inventory levels were down 16.5 percent as reported in July 2023. The property type that lost the least inventory was the Single Family homes, where it decreased 15.7 percent.

Take a look at the last 10 years of inventory levels of here locally. You can see that initial shock of the interest rates affecting inventory but then things started to normalize. 

Prices aren't dropping:

As you can see, prices didn't drop and we aren't seeing a crash...we are seeing a leveling but that is vastly different than a crash.

So why are some homes selling quickly and others sitting? 

Based on the buyers I'm working with now, buyers are scrupulous. The interest rates have changed what the monthly payment looks like and it's a tough pill to swallow to change a buyers expectations of homes. They are stretching to afford the monthly payment with the anticipation that they'll drop in a year or two to allow them to refinance. Their discretionary money after they move will be less than it has been in the recent years and therefore they are passing on homes that might have need updates after closing since they know they won't have that extra cash lying around. Those monthly payment already feel like salt in the wound compared to friends who purchased in the frenzy of 2021 with a 3% interest rate. Therefore, if they are going to have a hefty payment per month, they want it to make sense and not be a big financial drain after closing. Buyers are choosing to pass on homes even in the sake  that might be "priced right" and make sense but need work and wait to spend more on the updated homes so that there won't be any future big ticket items they'll have to also budget alongside this high mortgage payment.