But homeowners are still hesitant to list their homes, said Jeff Tucker, senior economist at Zillow. Although the inventory of homes for sale has increased this spring, he said that had more to do with buyers withdrawing than a flood of new homes on the market.
“Sellers don’t seem particularly enticed by these higher prices, or even that April and May are the best time to list the home for a quick sale that fetches a high price premium,” Tucker said.
The main reason homeowners aren’t flocking to the market to cash in, he said, is simply because they still need a place to live. “They fear, quite reasonably, that they will have to pay a lot to find another place that is as good or better.”
Many would-be sellers are waiting for the right time to strike, said Tracey Murray Kupferberg, agent at Douglas Elliman on Long Island, New York.
“A lot of people say, ‘Am I making a mistake waiting because I’ll never get that dream award again?’ There’s this fear that they’ll miss the top,” Kupferberg said.
But there’s reason to believe that peak could be now.
Sign that the market is cooling
It’s impossible to time the market exactly, but many analysts expect home prices to peak this quarter.
“It’s likely that the pace of price appreciation will peak at some point this quarter, either in April, May or June,” Tucker said. “It will be the peak of the annual rate of appreciation, and then it will slow down.”
In addition, there have been five straight months of declining pending home sales, as well as a drop in sales of newly built single-family homes, according to the National Association of Realtors. This means fewer people were willing or able to buy. And the share of homes listed with price cuts has increased over the past two months, according to Realtor.com.
The average profit made on the sale of a single-family home at the median price fell in the first quarter, according to Attom, a real estate data company. While profit margins often shrink during the slower winter months, the latest decline marked the first quarterly decline since the fourth quarter of 2019 and the largest since the first quarter of 2011.
“Some sellers have really stood out over the past two years,” Kupferberg said. “Some buyers did it too. It was a win-win situation then, with rising prices and very low mortgage rates. Now it’s different.”
She said sellers can often be slow to recalibrate after market shifts, always expecting their home to sell within days with manic bidding wars.
“Prices are going to skyrocket,” she said. “Then it takes a while for sellers to realize that they need to lower their price. This group of buyers can’t afford the house because the cost of borrowing has gone up.”
Need a quick sale
Lotte Vonk was hesitant to sell her house, mainly because she didn’t know where her family would go.
Vonk knew that when her second child arrived in a few months, space in her suburban Chicago home would become tighter. But she couldn’t find many homes on the market that she thought were right for her, and house prices and mortgage rates kept rising. Yet, like many potential sellers, she knew that if she and her husband didn’t sell quickly, they wouldn’t get the top price for their home.
“We were very aware of the rise in interest rates,” she said. “We thought we should sell this house and buy now, or renovate so we can stay.”
Even though they were considering expanding the three-bedroom townhouse where they live with their toddler, a dog and a cat, they were still considering new listings on the market.
Earlier this month, they found the perfect five-bedroom house in a nearby suburb. Once their offer was accepted, they rushed to put their home on the market within a week. They couldn’t afford to move both houses, so the offer to buy the new house was contingent on the sale of their current house in mid-May.
They listed their home for $315,000 last week and have already had over 20 viewings, but no viable offers.
“Everything I know about the market told me houses should fly off the shelves,” Vonk said. “When things don’t sell, it’s either the price or the product. It was rehab a few years ago, I know it’s not the product. So it must be the price .”
They will reduce the price and see if that brings in a buyer in time.
“I don’t want to lose the house I love,” Vonk said. But she added that she was ready to sell her house for a little less than her dream price, just so she could buy her next home.
Stay put, for now
When Kupferberg, the Long Island agent, recently visited a potential seller’s home, she told the owners that it would sell quickly, even if it took a little work.
The three-level home with five bedrooms, a swimming pool and a tennis court was becoming too much for empty nesters to manage, and Kupferberg knew it would be attractive to buyers willing to pay top dollar.
However, the couple hesitated on the decision to sell or stay put.
“They don’t want to miss the mark, they know their house would sell right away,” he said. “But if they take the plunge now, where will they live?”
Kupferberg said she had no easy answers. Many of his potential clients are large home owners who would like to downsize, but also want to stay in the community near their adult children or grandchildren, where their church or synagogue is, close enough to go see the same doctor. There aren’t many options.
“I don’t know what to say to people who want to sell but have nowhere to go,” she said. “Unless they have another home or they have a relative to stay with so they can benefit from what we see at the end of the sale market.”
Kupferberg said this particular couple was looking for a two-story home in a vibrant, upscale gated community, but there were few options and they weren’t immediately attracted.
“There’s nothing that really meets their needs,” she said. “They have nowhere to go if they sell out, so for now they’re staying put.”