Price Cuts
The market could slide further before it stabilizes, since sellers have yet to recognize buyers’ new reality. “The inventory doesn’t match buyers’ expectations,” says Gundersen. “Let’s say they were getting a 2% mortgage, now they’re getting 5%, and there’s a disconnect for what their monthly costs will be.” Sellers, meanwhile, “are still looking at the most expensive” comparisons when they go to price their house.
Inventory, meanwhile, is set to rise. “There will be more [houses] coming onto the market, and as more comes on, [sellers] will have to take a price concession,” says Brennan.
Current closings, he adds, are mostly holdovers from when people committed to a purchase during the boom market. “That residual effect will maintain itself for probably another two to three months,” he says. “The money that was in the pipeline will dry up, and then we’ll see what happens.”
There isn’t a single tier of the market, brokers say, that could be immune.
“It’s across the spectrum,” says Gundersen. The only exception? “If you have a house that’s in really, really good condition and it’s on the water, and there’s acreage and a dock and a tennis court, and it’s one of a kind and it’s priced well, you don’t have to reduce it. You’ll sell it at or maybe slightly below the current ask.” That said, she continues, “during Covid if it was priced correctly and had all those things it would go into a bidding war. Now, bidding wars are not happening unless the house is dramatically underpriced.”
Looking Toward August
It’s not all doom and gloom. DePersia says demand is still there.
“June in particular is not a particularly good gauge of anything,” he says. “Most of the serious buyers looking to buy a house have bought one already—if they buy a house in June, there’s a very good chance they won’t have it before summer’s over. So the big motivation to buy at that time of year is gone.” Come August, he promises, “things will ramp up again.”
He acknowledges things have slowed down from where they were a year ago but says he still has active buyers. “Today I put a house on the market in the $8 million-plus range, and already I had three brokers call to show it,” DePersia says. “And it’s not inexpensively priced.”
Gundersen points out that unlike in 2008, “we’re not in a banking crisis, so we’ll still have a healthy real estate market, just not as crazy as the last few years.”
And yet, she says, past performance might be a decent indicator of future results. “If I could predict the future based on experience, [the Hamptons market] is going to slow down before more inventory comes in, and a lot of buyers are waiting for the fall to buy.”
Still, she adds, “price your house to sell right now and you’ll get a buyer. A good deal is always a good deal.”
This article was provided by Bloomberg News.