It has become a buyers market for single-family homes in 32963.
Data provided by broker associate Sally Daley at Douglas Elliman shows a rapid increase in inventory over the past two months.
The result: An increasingly value-conscious mindset among buyers.
Top real estate brokers up and down the island say it is more important than ever to price homes correctly, or even a little aggressively, as we head into the busy winter selling season.
“I have never met a seller who didn’t want to get the most money possible for their home, which is totally understandable,” says Richard Boga at ONE Sotheby’s International Realty. “But now is not the time to be greedy.”
At the beginning of November, there were about 150 single-family homes for sale on the island, half of pre-covid norm. Today there are nearly 200 homes for sale in 32963, approximately two-thirds as many as were typically available in 2018 and 2019.
“We are moving slowly back in the direction of our pre-covid market, when we usually had more active inventory than the typical market,” says Boga.
When there are more choices in their price range, buyers gain leverage and bargain harder.
“I think it’s more important now than ever to price a new listing correctly,” says broker associate Cindy O’Dare, leader of the O’Dare Boga Dobson Group at ONE Sotheby’s. “Buyers are pushing back on overpriced properties. If you price a little aggressively you will most likely sell quicker.”
“In 2021, there were maybe 300 houses for sale in the whole county and many buyers moving here due to the pandemic,” says Berkshire Hathaway agent Chip Landers. “Today, there are 1,200 houses and fewer buyers, and sellers need to wake up to that fact. It is a discussion I have with potential sellers all the time.”
Besides inventory, insurance costs and interest rates have made buyers more price conscious.
“Housing costs are a three-legged deal,” says Landers. “Buyers can’t control astronomical insurance costs or interest rates that are double what they were a few years ago. Price is the only place they have some control,” in setting their budget or bargaining with a seller.
That mindset clashes with sellers who are still dreaming of the rapid price increases seen during the pandemic boom, when properties gained value on a weekly basis, sometimes selling for 50 percent more a year after a prior sale.
Pandemic buyers, many coming from markets in the Northeast, South Florida and California where housing prices were much higher, had a Diamond Jim Brady mindset, ready to pay the asking price or above to get what they wanted.
“There was far less of a discussion about value for a two-year or year-and-half period in 2021 and 2022,” Boga says. “Those price increases are still a recent memory for many sellers, and they sometimes want to list their home for an aspirational price instead of an accurate market price.”
“The COVID boom was a unique set of circumstances outside the realm of typical market behavior,” says Melissa Talley with the Brown Talley Group at Premier Estate Properties. “Our market remains strong, but the imperative of COVID is gone.”
Elizabeth Sorensen at Dale Sorensen Real Estate says, “It’s a common mistake for sellers to say or think, ‘We understand the market data, but we want to try a higher price because we aren’t in a rush,’ or ‘There could be that one buyer willing to pay more than market value,’ or ‘We know the buyer will want to negotiate, so we want to price it higher than recommended so we have room to bargain.’
“In most cases, when this is the strategy implemented, we see a loss of the momentum and excitement that could have been gained by a house priced well,” Sorensen continued. “Days on market increase until a price adjustment is ultimately discussed to reposition the property.”
By that time, a listing can seem stale or undesirable to some buyers and lead not just to a long, frustrating period of time on the market, but to a lower closing price in the end.
“Sometimes if a buyer has been looking for a long time they will have seen that listing in their search results for weeks or months and taken a look and passed on because it was over budget or seemed overpriced,” says Boga.
“Later, even if there has been a reduction or series of reductions and it now is well priced, it is not on their radar. It has lost its luster. They may have passed on it so many times in their search results they don’t even know why they aren’t interested. They just know there was something that turned them off.”
“A perfect example of the pitfalls of aspirational pricing is a listing I had last year in Central Beach,” says O’Dare. “It was a great property, east of A1A with the all the right pedigree. The seller wanted the price to be higher than I suggested, and it sat on market for a year, even though we spent a fortune advertising it and showed it many times.
“We actually got an offer of $1.8 million in the first month, but the seller thought it was too low and was offended by the offer. A year later, after waiting all that time, the seller listed with another broker and ended up taking less than that first offer.”
“When a house is priced above market value, there is no urgency from the buyer or buyers representative because there is a feeling that if someone is willing to pay the above-value price, great, but we can wait for a price adjustment or wait to see if other inventory comes on the market in the interim,” says Sorensen.
Listing a house competitively, on the other hand, brings a host of advantages, according to island brokers, creating a sense of urgency and sometimes resulting in not just a quicker sale but a higher closing price compared to what it might have closed at if it came on at an aspirational price and gradually reduced down to market value or below.
“If the buyer perceives a new listing to be aggressively priced, that home seems really attractive,” says Boga. “If it’s at a price point where there is a lot of deal volume, say a million-dollar house on the barrier island, you will have lots of showings and the right buyer for that house is likely to know there are many others interested – because of the good value and because they see others arriving or leaving when they come to look at the house. They know they need to make a strong offer that is as appealing as possible so their offer will stand out.”
Once a buyer gets the bug for a house – because it seems like an excellent value and is what they have been looking for – there can be an emotional attachment that persists even if a bidding war ensues, and they have to pay more than they originally offered.
Already imagining their happy life in the house they covet, they will persist through obstacles to attain the fulfillment of ownership.
“The correct price creates demand in a lot of ways,” says Sorensen. “A buyer looking at home priced aggressively will feel urgency to make a decision … and want to strike while the iron is hot.
“The home priced well takes advantage of the current market, while the home priced above market value may find a sale occur in the neighborhood for less than expected,” that lowers the neighborhood comps and makes a steeper price reduction necessary.
Landers mentioned a mainland listing of his that illustrates just how price sensitive the market has become.
“They were at $499,000 and not getting much action. We lowered the price by 5 percent, and now we are getting continuous showings, and I just got an offer last night.
“Why would a buyer look at a $500,000 house when they can look at a comparable house in the same neighborhood for $475,000?”
“Buyers want great value, and sellers want the most they can get for their homes,” Boga says.
“That is the way it has always been and always will be. Real estate transactions take place when the two parties meet somewhere in the middle.”
“As listing agents, it’s our job and goal to get sellers the highest and best in the shortest amount of time,” says Sorensen. “No matter what strategy the homeowner chooses, we will work hard to find the right buyer. [If they want to try for an aspirational price] that usually takes more time, so the sellers have to remain patient during the process.”
“All I want for Christmas is all my listings priced right!” said O’Dare.
