The fourth quarter of 2022 brought an essential halt to the real estate and lending world. For over two years, buyers were frantically offering well above list price on homes in desperation due to fierce competition and a low supply of housing. Once lending rates increased in 2022, the negotiating power between a real estate buyer and seller drastically shifted, as rates sharply increased over a relatively short time period. If you tried selling your home in recent months, chances are, it has sat on the market longer than you expected, maybe had an open house or two, and you likely took an offer below your original list price. Now this scenario was not at all uncommon prior to the 2020 pandemic boom; however, it represented a dramatic shift in real estate transactions in recent years.
Generally speaking, the winter months in Northeast Ohio are the worst time to list and sell a single-family home. Combined with the dramatic increase in lending rates in a short time period, a perfect storm was created for what has transpired in recent months. Towards the end of January and into early February, I have seen the market adjust to the increased lending rates. Homes are beginning to sell quicker, seller concessions are reducing, and multiple offer scenarios are playing out again. This leads me to believe that these past few months could be just a small blip and a necessary evil as a result of the fallout from the pandemic boom. A complete and on- going shortage of single-family housing is being felt in a large majority of real estate markets across the United States.
I expect the local real estate market to pick back up as we head into the spring season and market value levels to maintain or possibly even increase from late 2022 levels. Lending rates, and short term economic fluctuations could alter this prediction, however, based on recent market activity and conversation I’ve had with other local real estate professionals, I am quite optimistic for the 2023 real estate market.
Velardo Appraisal Group is a small family owned and operated business with years of market experience. We have worked with many reputable local and national banks, as well as credit unions since 2009. The appraisal process can feel very overwhelming and chaotic – let us do the work for you! Contact us for a free 15-minute consultation.