Should Home Sellers Panic About Dropping Home Values? Expert Insights on Navigating the Current Market

The U.S. housing market has undergone a significant transformation in recent months, with sellers now facing a buyer's market and dropping home values. According to real estate investor Graham Stephan, the current market is the worst for sellers since the Great Financial Crisis of 2008-09. In a recent video posted to YouTube, Stephan warned that sellers are beginning to panic as they face an estimated 34% more homes for sale than there are offers. The current market is characterized by a record imbalance of 500,000 sellers outnumbering buyers, which is the largest imbalance on record. As a result, homes are sitting on the market for longer and prices are starting to drop dramatically in 61% of the U.S., depending on location. According to the National Association of Realtors (NAR), pending home sales decreased by 6.3% in April, with all four U.S. regions seeing month-over-month losses in the number of transactions. NAR chief economist Lawrence Yun noted that lower mortgage rates are essential to bring home buyers back into the housing market, as they are currently in a better position to negotiate more favorable terms. For home sellers in some markets, those terms could mean selling for a lot less than they could have a year ago, which is why many are panicking. Jeff Lichtenstein, president of Echo Fine Properties, told The Wall Street Journal that there will be more price reductions and a greater willingness to sell at a lower number in the coming months. Despite the shift from a seller's to a buyer's market in some parts of the country, many sellers still hold the upper hand. A report released earlier this month by Redfin noted that more than one-quarter (28%) of U.S. homes are selling above the asking price, although this is down from 32% a year earlier and represents the lowest level for this time of year since 2020. However, there are still pockets of the country where sellers can earn a nice profit. Overall, the median sale price has been slipping below the median list price in most of the country, which is a big change from a few years ago when the median sale price was typically much higher than the median list price. On the bright side, median sale prices are only about 7% below list prices, and in many cases, those list prices are well above what sellers originally paid for the home. Whether you should start panicking depends on where you live, but as with anything related to money, it's better to stay calm and not let fear drive your decisions. Instead, focus on staying informed and making informed decisions about your home buying or selling plans. In conclusion, while the housing market is currently facing challenges, there are still opportunities for both buyers and sellers to make smart decisions and find success in their respective markets. It's important to stay informed and not let fear dictate your actions, but rather to make well-informed decisions based on current market trends and your own personal goals.