But homeowners are still reluctant to list their homes, said Jeff Tucker, a senior economist at Zillow. While the inventory of homes for sale increased this spring, he said it was more a result of buyers retreating than a flood of new homes flooding the market.
“Sellers don’t seem to be particularly incentivized by these higher prices, and don’t even know how April and May are the best times to list homes for quick sales and great premiums,” Tucker said.
The main reason homeowners aren’t flocking to the market to cash in is simply because they still need a place to live, he said. “They are very legitimately concerned that they will have to pay a lot to find another better or better place.”
Many would-be sellers are waiting for the right moment to strike, said Tracey Murray Kupferberg, an agent in Douglas Elliman on Long Island, N.Y.
“A lot of people are saying, ‘Have I made a mistake waiting because I’m never going to get that dream price again?’ They worry that they might miss the peak,” Kupferberg said.
But there is reason to believe that a peak may now be reached.
Signs the market is cooling
It’s impossible to time the market exactly, but many analysts expect home prices to peak this quarter.
“The rate of price appreciation will likely peak sometime this quarter, whether in April, May or June,” Tucker said. “That will be the high water mark for the annual rate of appreciation, and then it will decelerate.”
Also, according to the National Association of Realtors, pending home sales fell for the fifth straight month and new single-family home sales fell. That means fewer and fewer people are willing or able to buy. According to Realtor.com, the share of homes listed for price reductions has been increasing over the past two months.
The average profit from selling a median-priced single-family home fell in the first quarter, according to real estate data firm Attom. While margins typically decline during the slower winter months, the latest drop marks the first quarterly decline since the fourth quarter of 2019 and the largest decline since the first quarter of 2011.
“Some of the sellers have been really successful over the past two years,” Kupferberg said. “Some buyers have done the same. It was a win-win back then, house prices were up and mortgage rates were very low. It’s different now.”
She said sellers were often slow to readjust after a change in the market, and they still expected their homes to sell in a heated bidding war.
“Prices are going to peak,” she said. “Then it takes a while for sellers to realise they have to lower their prices. This group of buyers can’t afford to buy a house because borrowing costs have gone up.”
Need a quick sale
Lotte Vonk was hesitant to sell her house, mainly because she wasn’t sure where her family would go.
Vonk knew that when her second child was born in a few months, space in her suburban Chicago townhouse would get even tighter. But she can’t find many suitable homes on the market, and house prices and mortgage rates have been rising. Still, like many would-be sellers, she knew that if she and her husband didn’t sell soon, they would miss out on getting the top price on the home.
“We are very aware of rising interest rates,” she said. “We were thinking we should sell the house and buy it now, or renovate it so we can stay.”
Even as they consider expanding the three-bedroom townhouse that lives with their toddler, dog and cat, they’re still eyeing new listings on the market.
Earlier this month, they found the perfect five-bedroom home in the nearby suburb. Once their bids are accepted, they race to get their home on the market within a week. They can’t afford either, so the offer to buy a new home depends on their existing home selling by mid-May.
They listed their home last week for $315,000 and have had more than 20 inspections with no viable offer.
“Everything I know about the market tells me these houses should be flying off the shelves,” Funk said. “When things don’t sell, it’s either the price or the product. It was a gut rehab a few years ago, and I know it’s not the product. So it has to be the price.”
They will lower the price to see if they can attract buyers in time.
“I don’t want to lose the house I love,” Funk said. But she added that she was willing to sell her house for a little less than her dream price just to be able to buy her next home.
stay as it is for now
When Kupferberg, a Long Island agent, recently visited a potential seller’s home, she told the owner it would sell quickly, even if it did need some work.
The three-level home with five bedrooms, a swimming pool and a tennis court was becoming unmanageable for empty-nesters, and Kupferberg knew it would attract buyers willing to pay a premium.
Still, the couple is hesitant to sell or stay put.
“They don’t want to miss the target, they know their house is going to sell right away,” said. “But if they took that step now, where would they live?”
Kupferberg said she doesn’t have an easy answer. Many of her potential clients are homeowners with large homes who want to downsize but also stay in a community near their adult children or grandchildren, where their church or synagogue is close enough to see the same a doctor. There aren’t many options.
“I don’t know what to tell people who want to sell but have nowhere to go,” she said. “Unless they have another home or have relatives living together so they can benefit from what we’re seeing at the back end of the sales market.”
Kupferberg said this particular couple was looking for a single-story home in a vibrant upscale gated community, but the limited options didn’t immediately appeal to them.
“Nothing really meets their needs,” she said. “If they sold, they had nowhere to go, so for now they’re staying put.”