The "Frozen Market" in Real Estate: Implications for Buyers and Sellers

 

The "Frozen Market" in Real Estate: Implications for Buyers and Sellers

The real estate market is known for its fluctuations, with periods of booming sales and rapid price increases, followed by times of stagnation. In recent months, there has been growing talk of a "Frozen Market" in the real estate industry, a term used to describe a situation where home sales seem to be at a standstill. Let's delve into what this means for both buyers and sellers.

Understanding the Frozen Market

The term "Frozen Market" refers to a slowdown in the pace of existing home sales. This phenomenon often occurs due to a combination of factors, including rising interest rates, supply chain disruptions, and economic uncertainty. One such example is the September 2023 report, as highlighted in a CNN article. These factors can lead to homes spending longer on the market, a decrease in buyer activity, and potentially a leveling off of home prices.

Implications for Buyers

For potential homebuyers, a Frozen Market can present both challenges and opportunities:

  1. More Inventory: As homes stay on the market for a longer duration, there may be more options available to buyers. This can be advantageous for those who are looking for their dream home and have time to explore different listings.

  2. Negotiating Power: With decreased competition, buyers may have more negotiating power when it comes to pricing and contingencies. Sellers may be more willing to compromise in a slower market.

  3. Interest Rates: However, it's important to keep an eye on interest rates, as they can influence the affordability of a home. Rising rates can counterbalance some of the advantages of a Frozen Market, so buyers should lock in favorable rates when possible.

Implications for Sellers

Sellers, on the other hand, may need to adjust their strategies in a Frozen Market:

  1. Price Realism: It's essential for sellers to set realistic listing prices. In a slower market, overpricing can lead to prolonged days on market and potential price reductions, which can be detrimental to the sale.

  2. Home Presentation: To stand out among the competition, sellers should ensure their homes are well-maintained and properly staged. Making a positive first impression is crucial.

  3. Patience: Sellers may need to be patient and prepared for their homes to remain on the market for an extended period. This doesn't necessarily mean they have to accept lower offers, but it does require resilience.

Conclusion

A Frozen Market in real estate can have varying effects on both buyers and sellers, depending on their individual circumstances and the local market conditions. Staying informed about the latest trends and working with experienced real estate professionals can help navigate these challenging times.

In the end, whether you're buying or selling in a Frozen Market, the key is to adapt to the situation and make informed decisions that align with your long-term goals and financial stability.

If you have any questions about how you can navigate through the FROZEN Market, don’t hesitate to reach out. We are here to help!

Coloradans Are Equity Rich

Have you heard the news lately about the Denver Real Estate Market? The market is cooling, Supply is up and demand is down. It sounds all doom and gloom but its not as bad as you may think. There is a huge opportunity for Sellers and Buyers in our real estate market right now. 29.6% of Coloradans are Equity Rich, which means they have more than 50% equity in their homes. 98.3% have positive equity, making this an amazing time to sell in order to consolidate debt and move into their dream home.  Even if you move into a higher priced home and have a higher mortgage payment, if you pay off all your debt like your cars, credit cars, student loans, etc, you will build more wealth than if you stay where you are and keep paying on your debt that isn’t gaining you any equity or wealth.

Yes, the market has slowed down a little as the days on market is up but Sellers, who price their home right, are still selling quickly with days on the market of 26 days compared to 3 months in a balanced market.

Buyers it’s still a great time to buy even with the interest rates at around 5%. I purchased my first home at 6%. People were buying homes in the 80’s at 18% but they still purchased as there is no better way to build wealth than buying a home.

Inventory is up and that is such great news because we’ve been so low for so long and in my opinion it wasn’t a healthy market and a way to buy a home. There was a frenzy to have to get to a listing the minute it hit the market, make a decision and get it under contract within hours of it hitting the market. Because of this Buyers were not making good decisions about buying the house and around 25% of contracts were falling bas Buyers would back out of the contract due to inspection items and Seller’s wouldn’t do any repairs because they had another Buyer as a back-up. Again, this was just not a healthy way to purchase a home.

With more inventory means better decisions can be made and Buyers can take their time and buy the right house for them. This goes for Seller’s too as Sellers will not have to fear putting their house on the market and it selling within 7-20 days and not knowing where they are going to go next. They can now put their home on the market and have more options on their next move.

Were in a sweet spot in the market and it’s time to take advantage of it and either buy or sell.

It’s always a big decision to buy or sell so let me help you understand the numbers and even share some older historical data to show you what our cycles have been like so you can feel more comfortable with your decision.

Feel free to give me a call or lets sit down for coffee. I would love to help you with your next move! Brigette Modglin, 303-408-2600