To start, let start by putting the previous years into context by visiting the past a bit in this opinion piece.
During the Great Recession, home buyers no longer felt the need to keep up with their peers when purchasing a home. Buyers decided that location, floor plan, bedroom count, and lot size were far more important than counter tops, types of flooring, and modern interior paint colors like previous buyers did.
On the flip side, sellers had to negotiate a buyer's offer when a buyer submitted an offer the requested seller's contribution to buyer's closing costs, contained a home inspection addendum and subsequent work items and other potential terms written into a purchase and sale offer - read why I don't like the term "bid" here.
Then in 2016, home buyers had to get on the front lines and experience the immediate impact of low housing inventory and other buyer competition. The norm became they had to write purchase and sale that included over list price offer with an accompanying escalation clause, waive their protections - a home inspection and buyer financing are just two examples - have an increased downpayment to cover a possible low offers.
Now in the second half 2022 and into 2023, home buyers have, and will continue to have, some difficult choices to make.
Interest rates are expected to remain "high" for the foreseeable future to help slow inflation yet Snohomish County home buyers are still facing expensive home prices, low housing inventory and the possibility increasing interest rates.
So that leads me back to the title question: Will home buyers and sellers have to adjust their expectations?
A resounding Yes.
Again, we jump back to 2016. The housing market, job market, and greater national economy started bustling and homeowners really embraced pride of ownership and invested back into their homes with repairs and updates. And, over the last 6 years that is what 99% of home buyers expected when viewing a home.
Homes were modern. Free of defects. It was the expected to have an updated home. Buyers loved the updates and sellers reaped the financial benefits. However, those home buyer failed to understand is how inexpensive those updates were in comparison to how costly the homes had become.
It has been really nice since I was licensed in 2008 where it seemed everything was in some sort of distressed situation.
The real estate landscape has changed. Buyers will now need to adjust their expectations based on increasing house payments due to rising interest rates and sellers will have adjust their expectations they will no longer have buyers fight over their property and have dollars thrown at them.
Here is my advice.
BUYERS: Remember, cosmetics can always be changed and updated, and those updates will go out of style. However, neighborhood, style of floorplan, location of the home or property, and lot size are timeless features that always retain value.
SELLERS: You will no longer have multiple offer situations, minimal contingency purchase and sale offers, and retire from the home sale. Sellers will may have to consider offers that are less than list price, contain multiple contingencies, and possibly contribute to buyer's closing costs, buy down points and the like yet the home sale will go through - if you're seller then buyer you may receive those same benefits during a purchase.
So buyer and seller, ask yourself: What is important?