Realtors love to blame an election for whatever the market is doing. It’s slow? Everyone’s waiting until after the election. It’s busy? Buyers are getting ahead of the election. There’s always an explanation. However, when it comes to midterms, this is probably the first time its getting the same attention as a general election, at least as far as I can remember.
I’m not a political expert, but I haven’t found much evidence that midterms alone make a meaningful difference in real estate. The last several years have taught us that the housing market doesn’t always behave the way logic and reason suggest it should.
Something I read today did stick with me, though: the mood changes before the numbers change. That goes both ways, and we’ll see how it plays out. But if today’s stock market was any indication, it feels like a pretty good mood to me. Rates moving back toward 7.25% didn’t hurt either.
I’m not endorsing this rationale. Whether any of it actually happens is anyone’s guess. But I was curious about why builder stocks surged, with Toll Brothers up 6% and Lennar up 9%. We were finally getting some leverage back, and it felt good to have real negotiations and meaningful concessions, something we don’t always get with new homes. Is that going to go away?
The thinking seems to be that tariffs could get cut, SALT deductions could expand, and fewer data centers could leave more money for other projects (and hopefully people too). Whether that translates into builders making more money remains to be seen, but investors clearly liked the idea.
Oil prices falling 8% also helped the mood and could help bring rates down. In Northern Virginia and the DC metro area, rates seem to be the biggest thing moving the housing market. High prices have been around for a few years now, the economy has wavered, but buyers seemed willing to look past all that when rates are in the low 6s or below. In my experience, that’s when our market consistently favored sellers and outperformed the broader national market.
We wrote offers for two buyers this week, and both came after big price reductions.
The first home sat for almost 60 days. The seller dropped the price by nearly 10%, and suddenly there were multiple offers, which isn’t exactly typical right now. That threw us for a loop as the price reduction came after we saw the home. We ultimately lost to someone willing to waive contingencies we weren’t comfortable waiving.
The second home had been on the market for more than 90 days. The seller also cut the price by about 10%, and our clients negotiated almost another 3% off the new asking price. Luckily no other offers materialized and allowed that further $20,000 reduction in price. In a slightly stronger market, we might have paid $20,000 over asking price, thats a $40,000 swing.
For sellers who can’t sell right now, there’s a little hint in there.
For our first buyers, there’s something to think about too. Maybe we should have made the offer before the price reduction, even if it seemed too low or unrealistic. Both of these homes were initially priced correctly, but based on the market 6 months ago, not today. Opportunities still exist and there are still sellers who are just happy to get a deal done.