Homebuyers have faced a turbulent housing market over the past few years. Rising home prices and elevated mortgage rates have forced many Americans to reconsider or postpone homeownership until conditions become more affordable.
In 2020 and 2021, home prices skyrocketed as moving patterns shifted from cities and homebuyers began to take advantage of record-low mortgage rates below 3%. After the initial Covid-era housing boom, surging inflation in 2022 exacerbated housing prices that were already on the rise.
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As mortgage rates inch back toward 7%, homebuyers have tempered their expectations for a strong 2025 housing market rebound, but rising home inventory may be enough to lure them back to the market.
Though the outlook for the second half of the year is uncertain, many experts believe that homebuyers will have more options and negotiating power as listings take longer to sell.
Berkshire Hathaway Home Services believes there may be a shift in the housing market, offering advice for how buyers and sellers can navigate prices in the midst of continued market swings.
The housing market has favored sellers for the past few years, but increasing inventory and weak demand may shift power to homebuyers. Berkshire Hathaway Home Services expects housing prices may also need to readjust.
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Berkshire Hathaway Home Services explains that housing market benchmarks shape home prices
Years of rising mortgage rates have created a housing market stalemate where sellers became hesitant to list their homes, creating a supply shortage and increasing competition among homebuyers. Many first-time homebuyers have been collateral damage, forced to delay or rethink homeownership entirely.
Eventually, buyer demand has weakened enough to the point that housing inventory reached a surplus of over 500,000 homes, the highest level since 2013.
Now, housing conditions have completely shifted, creating a buyer’s market for the first time in years. For sellers to keep their listings competitive, Berkshire Hathaway Home Services suggests they may need to implement price reductions.
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The blog recommends that sellers examine home prices in their area and look at home sales trends over the past few months.
“Accept the current market. Ask for an updated comparative market analysis with detailed sales trends over the last three months. Are home sales slowing or accelerating? Are home prices rising or falling? Price your home slightly under the trends.”
Berkshire Hathaway Home Services notes that sellers may need to reduce their listing price
Realtor.com found that home listings spent an average of 51 days on the market in May, up from 45 days in May 2024 but on par for the pre-Covid housing market. However, the number of unsold homes is up 21% from last year, marking a considerable change in sales trends.
In March, which is typically the onset of renewed buyer demand during the spring housing market, 23% of home listings received a price reduction. Now, as housing inventory rises, sellers are losing the upper hand and may need to lower their pricing expectations.
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The Berkshire Hathaway Home Services blog wrote that, “A price reduction should send the right message to the marketplace — that your home is well worth its asking price.”
It also suggests that sellers may need to put in more effort to draw in buyers and close sales. “Pay for professional staging and photography to showcase your home to better advantage online. Highlight the charms and special features of your home as well as the neighborhood.”
While this may not be the shift sellers were hoping for, a more favorable environment for buyers may be enough to motivate housing activity and undo the current gridlock.
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