Family circumstances forced Destin, Florida-based Corcoran Group agent and leader of The Ketchersid Team Jodi Ketchersid to take a step back from her real estate career in May.
When she returned to the industry in late summer, the housing market looked different. A lot different.
“It was like, ‘Holy cow! What happened to the market?’” Ketchersid said. “It felt like it happened overnight, but it wasn’t like the light shut off. I think this area was so undervalued for so long — prices were low — and then everything went crazy and house prices became almost hyperinflated as people were willing to pay well over list price.”
In November 2021, the median home sales price in Destin soared to $650,000, a year-over-year increase of 28.1%, according to Redfin. Since then, prices have cooled considerably dropping to a median of $605,000 in August 2022, just 1.0% higher than a year ago.
Ketchersid said home prices are not the only thing in the Destin market that has cooled in the past few months.
“The average number of days on market now is getting closer to 90 days as opposed to like 24 hours, and we aren’t getting those countless multiple offer situations anymore,” she said.
In addition, Ketchersid estimates that there has been roughly a 75% increase in inventory since the spring, giving buyers a chance to browse around and potentially get a better deal.
These market conditions – largely driven by mortgage rates now at the highest level since 2008 – are not unique to Destin. Across the country housing markets that were white-hot just a few months ago are seeing prices drop and activity slowdown.
According to a recent study from CoreLogic, the Crestview-Fort Walton Beach-Destin, Florida metro area, along with the Settle suburbs of Bremerton-Silverdale, Washington, as well as Reno, Nevada, Boise City, Idaho, and Bellingham, Washington, are all at risk of price declines over the next 12 months. Bremerton-Silverdale topped the list with a 70%-plus probability of home price declines.
In Boise, Idaho, where prices have cooled from $579,000 in May 2022 to $485,000 in August 2022, a 3.0% year over year price decrease, local Keller William’s agent Christina Ward says pricing homes well is essential to getting a deal done.
“We usually price homes based on the last three months,” Ward said. “If we are in a declining market, we try to get a bit ahead with the pricing and if we are in an increasing market, like the last couple of years, we price based on the previous three months and still get a higher offer. But what I have noticed more recently is that my usual pricing strategy is not getting homes to move as quickly as I or my clients would like. So, I am actually recommending my clients come in a little bit lower even though we are not seeing the actual overall market decrease in value yet.”
Agents across the country are struggling to manage seller expectations. According to a recent report by proptech firm HomeLight, 86% of agents believe sellers are overconfident in current pricing, with 65% of agents reporting that this results in sellers being unwilling to take on deferred maintenance and 57% reporting that sellers have too much clutter in their home to make it appealing to buyers.
“We are having to take a little extra time with a property before it is listed, so the best version of it is going up for sale,” Megan Lowe, a Reno, Nevada-based agent at Chase International Real Estate said. “Just making sure we don’t cut corners so that when it hits the market it is the best listing out there. Before you could put a property on with dirty carpet and no one cared — that isn’t the case anymore.”
Frustrated sellers grappling with market that’s suddenly down in the dumps is only part of the problem.
“The biggest trend is anxiety from the buyers,” said Mike Wood, a RE/MAX agent in Reno, Nevada. “It really stems from a fear of the unknown. What I am hearing from most buyers is that don’t know if they want to buy right now. They keep hearing that prices are going to continue to drop and I think people tend to focus on what has happened before, so they are thinking back to 2007 and 2008, but the circumstances now are so different that I don’t see that happening again.”
In January 2022, year over year home price growth in Reno surged 29.5%, but had slowed to 10.9% by August 2022. The median home sale price has also dropped for three straight months to $549,000 from a high of $579,000 in May 2022.
The half-dozen agents who spoke with RealTrends all said a different skill set is required in the current housing market.
“The analogy was that before we could just walk outside to the apple tree and pick a ton of apples— they were just hanging there. But now we have to climb branches and nurture the tree,” Wood said. “We are having a lot more conversations with clients, discussing how the market works with them and how it has changed. Instead of calling sellers once a week, it is more like three or four times a week with in-depth feedback.”
Ketchersid added: “It is very important for agents to reach out to their sphere. And then of course when they get the lead pricing and making sure the property is staged and ready to sell.”