We’ve all seen the news. Inflation fears, supply chain issues, and housing shortages have all been breathlessly reported on, making this new economic reality a different world to understand and navigate through when buying, selling, or building a home.
Are we in transition? Or is this the next version of the 2008 housing crash and financial crisis? The answer to this question, along with the challenge of addressing our new market, can be intimidating for anyone looking to buy, sell or build property right now.
Matt Perkins and Eric Hjelm, two Greene Realty Group agents who were selling houses when the market stumbled in 2008, shed some light on how the current climate differs from the last significant slowdown, and how sellers, buyers, and builders can prepare for it.
Today versus 2008
Matt Perkins started his career in real estate in 2006 and had a front-row seat as the financial crisis unfolded. He notices a major factor that makes today’s climate more unpredictable, yet potentially less catastrophic.
“The climate today seems to be driven a lot more by consumer confidence,” he says. “People were hesitant to buy into the market in 2008 and had a reason not to be confident. Even though a lot of the issues we saw in 2008 have been addressed, consumers are still nervous about the unpredictability.”
Many of the issues that caused the housing crash of 2008 have indeed been largely addressed. More federal regulations and industry policies have been implemented to prevent reckless lending, and while there are still some home loans (FHA, VA, and USDA loans in particular) that don’t require down payments, many buyers come prepared with a sizeable amount to put down on a new home, increasing equity in their property from the start and providing financial breathing room when values begin to dip.
“Everyone has gotten smarter than before,” Perkins says. “The mortgage industry has already adjusted to rate hikes (from the Federal Reserve) and buyers sometimes come with as much as 50% down payment in some cases, so we see less bad loans.”
Eric Hjelm has been serving clients as a realtor since 1984 and has been a part of the Olympia community for more than 50 years. He has seen several fluctuations in the market and all sorts of conditions in the mortgage industry. He also agrees that the conditions in today’s market are vastly different than 14 years ago.
“It’s totally different,” he says. “The financial products were wild back then. If you had a pulse, you could get a loan. This feels more like the settling of a hot market.”
Still, there is no denying that we are entering a new economic environment that might be intimidating to people who are entering the market. So, what sort of advice do they give to buyers, sellers, and builders?
Advice for Buyers
Hjelm believes buyers will see the benefits of the resettlement…if they’re patient.
“Now is your time,” he says. “'Spend time on figuring out the details of your offer regarding price, loan type, repairs requested, and other possible seller concessions. You're going to have time now. The market isn't going to turn to a buyers’ market but a good healthy negotiable market.”
With bidding wars fading and one-day home sales becoming a thing of the past, conditions certainly have tilted in favor of buyers. Perkins emphasizes that buyers still need to make sure not to let perfect be the enemy of good.
“At a certain point, if you really want the house, you will still have to get off the fence and take advantage,” he says. “Don’t wait for a smoking deal, or for rates to go down, because then you’ll be fighting for homes again.”
Advice for Sellers
For those looking to sell their home, both agents emphasize that it’s not time to panic. It’s time for adjustments.
Improved pricing, home staging, relying on seller checklists, and creating buyer contingencies are all methods that will now be essential to maximizing a home sale.
“You could’ve sold a chicken coop over these past couple of years without much effort,” Hjelm jokes. “Now you have to make sure to have your home ready to sell.”
Above all, sellers should be ready to have their homes on the market for a bit while buyers stretch their legs and take advantage of a market that favors their needs.
“It’s OK to be optimistic,” Perkins says. “But be prepared to chase the market a bit.”
Advice for Builders
Just because the market is shifting doesn’t mean the building will be stopping any time soon, but much like people who are selling their homes, builders will have to be ready to change course quickly to meet what the market demands.
“It might be time to think about not offering things like full landscaping, high-end fencing, and finishing,” Perkins adds. “When the market gets better, bring them back. But for now, you have to move with the market and maximize your building efforts.”
Follow the Signs
In the end, both Perkins and Hjelm believe that knowledge is key and that there are still plenty of reasons to be optimistic.
“I don’t think we are in a crash or some sort of bubble bursting,” Perkins says. “You just need to take time and study everything you can in the market.”
Conditions may be changing, and the market may be shrinking, but like with so many things we are dealing with today, taking a breath and staying the course will help buyers, sellers, and builders looking to navigate through a complicated world.