NOTHING IS REAL ESTATE NORMAL
It’sIt s a confusing and uncertain time for home buyersbuy and sellers and those considering entering the real estate market.marke Andrew Winter, Foxtel’s real estate expert and host of Selling HousesHo Australia and Love it or List It Australia, shares h
There is absolutely zero predictability about the market as a whole.
Every seasonal standard, every prediction, every trend that might have applied doesn’t apply. Nothing is normal in the housing market now and as a buyer or seller you have to be aware of that.
Generic tips at the moment are useless, buyers and sellers need to be looking at the micro market, at suburb by suburb.
Each market is very different from suburbs to suburb, from city to city, right across the country. Even moving a few suburbs across, the market can be completely different and it is shifting at a rapid pace.
One element affecting all markets is effect of the rapidly rising interest rates and how that is hitting buyers and sellers. We all presumed the rate rises would have a significant negative effect on house prices when they started to halt serious price growth.
However that hasn’t eventuated. Price growth has stopped or prices have fallen by single digits in most markets. In real terms that is not a huge drop and we have not witnessed the massive decrease in prices many expected.
One reason for this is that the shortage of supply has continued into 2023. Stock levels are very low, There remains a lot of competition for homes and buyers can’t just come in and make a silly offer and expect that vendors will accept it.
On the other side of the ledger, the heat has been taken out of the market when it comes to prospective buyers.
The fear of missing out has been replaced by the fear of overpaying. Buyers are not getting carried away like they were. For example, for a home with a price guide of around $1m, buyers were coming in with offers of $1.2m that might push the sale price up to $1.4m. Now they are sticking to their guns and their budgets and such a home might now even go for $950,000.
As a buyer in a market with limited stock you have to know that a cheaper or discount bid is not going to work. So if you’re not going to play the game, don’t bother joining.
Lack of supply is also weighing on the mind of prospective sellers.
We are seeing this in looking for case studies for Love It Or List It (LIOLI) is very different to Selling Houses Australia, because the homeowners are not sure if they want to sell. Homeowners are worried that if they do sell, they might not be able to get back into an area they want so they have to take the hit on interest rates now and in five to 10 years it won’t matter.
They also worry that if they do sell, given that supply is so limited, they might not find the next right house for them. If you do sell and you’re worried about your time frame to buy you can always opt for an extended settlement.
You want to go from home A to home B, having to get temporary accommodation in the meantime can be very expensive and also very tricky in the currently very tight rental market. Normally the best thing to is to get your house under offer and then get out there and get looking for your next home.
In displaying the home at inspection, buyers today want to see more educated styling and staging, not a bland lack of personality. Give your home life, have the family photos out, the dog bowl and a nice blanket, make it look beautiful.
FOCUS ON THE LOCAL
It’s a really challenging market for a lot of people whether you are a buyer or seller. What is most important is what is going on in your local market.
If you’re selling, understand how much is going on to the market in your area, know how much competition you might have. If there are hardly any similar homes for sale, you have a much better chance of getting a good price because people will buy it.
If you look even two suburbs across the market might be completely different. As a prospective seller, do your research, spend a lot of time on realestate.com.au, so you understand the market you are looking to sell in and the price you can reasonably expect
Look online at your suburbs and the suburbs one or two across, try to get a price guide from the agent, if one isn’t offered in the listing. See how
You have to know that a cheaper or discount bid is not going to work
Buyer or a seller, the secret is to really keep an eye on the micro market which applies to you
many properties are for sale within the range your home might be, record the number of homes for sale and do it again the week after and the week after and see if the level is maintained.
At the same time, look at recent sales, look for homes similar to yours – the same number of bedrooms, bathrooms, with a pool and garage or without. Location and nearby amenities are crucial too. A home similar to yours might sell for a rather different price several suburbs across, so it’s important to understand why so you are realistic about the price you can expect.
Buyers should focus their searches in a similar manner.
Whether you are a buyer or a seller studying the market, the secret is to really keep an eye on the micro market, which applies to you. Big or discounted sales or a lack or glut of supply in another micro market will heavily influence the price there but not in your market.
Make sure you record your learnings so you can refer to them later. Stay focused in your online search, if you’re buying or selling, narrow it as much as you can.
We have heard a lot about the mortgage cliff of fixed rates for those who locked in their loan several years ago and are now starting to come off, but the market has not started to feel that yet.
For people on a fixed income, also fighting other cost of living rises, if their mortgages become hundreds or even thousands of dollars more a month, that is the risk to the market, it could load the market with desperate listings, stock will rise and prices will fall.
But owners can and will do almost anything to prevent that panic selling. For them it might be a case of getting an extra job, Airbnbing a guest room or granny flat, getting the older kids to chip in some money to help out to pay the mortgage.
TRUST YOUR GUT
Lastly trust your instincts. Investments are different, you can take the emotion out of it and look only at the figures. But if you’re an owner-occupier, go with your gut about how the house feels. Go with the feeling With a caveat, listen to your kids and the grandparents, if it is to be a multigenerational home. If there’s something the grandparent hates and is going to cause an issue such as stairs, take in under consideration but if it’s the perfect home but doesn’t have the pool the kids crave, the excitement of a bigger house will make up for that.
Buying a home is a science for industrial and commercial real estate but not for residential housing. If it feels right go for it.