Sell Now or Wait? Navigating the Greater Cleveland Real Estate Market
The Greater Cleveland housing market is in a transitionary period moving from what was an incredibly strong seller’s market to a market where buyers’ negotiating strength is increasing. While this can be good news for buyers, it can be difficult for sellers who are used to having more control over the process. If you are considering selling your home in Greater Cleveland, it is important to understand the current market conditions and what strategies will work best for you.
Is Greater Cleveland transitioning from a seller’s to a buyer's market?
Between 2020 and 2022, inflation, low inventory, and record demand due to low interest rates helped to create an environment of overpriced homes. Sellers enjoyed a period of euphoric gains. For example, according to Redfin, between May of 2021 and 2022, when 30-year mortgage interest rates hovered around 3%, median home prices in Cleveland Heights, OH grew an astounding 46.9% year over year. Home value growth has significantly decelerated since then, in large part because the Federal Reserve has hiked interest rates, causing mortgage interest rates to spike to over 5.5% in June and July of 2022. Currently in the Greater Cleveland real estate market we are seeing increases in inventory, longer listing periods, reduced demand, and price cuts unlike anything we saw last year or even the last six months ago.
Should you sell now or wait?
Property owners in the Greater Cleveland area and in the neighboring Summit, and Portage Counties are surely wondering whether they should sell now or wait. While there are arguments one could make in favor of waiting to sell, the better arguments counsel for selling sooner.
First, one could argue that while the Federal Reserve is hiking interest rates now, the economy is headed into a recession and that will force the Fed to stop hiking and even potentially cut rates. If the Fed reverses course in its hiking cycle and/or cuts rates down the line, this will cause mortgage rates to decline and consequently home prices to increase. By waiting to sell, one might argue that sellers can reap the benefits of that future scenario. Second and alternatively, one could argue that the economy is strong and will not head into recession, the Fed will get inflation under control in 2022, housing inventory will remain tight, and demand will remain high, and all of these factors will support continued home price appreciation so waiting to sell is not problematic.
There are several problems with these arguments. With respect to the first argument, if the economy looks like it is headed for a recession or does enter a recession, that fact alone will not be good for home prices. When people are hurting economically and there is economic uncertainty, they will not be jumping into big financial decisions like purchasing a new home. Accordingly, even if the Fed ultimately must reverse its hiking cycle due to a recession, that reversal would occur only after recessionary economic damage has been done and sellers would likely be selling from a lower price level at that point. At least at the moment there is some uncertainty about whether or not there will be a recession, and that is a better place to sell from then trying to sell during or following an actual recession. Additionally, waiting to sell exposes sellers to the risk of multiple Fed rate hikes before they find a buyer, which will further dampen prices.
Regarding the second argument for waiting, it would be a gamble with just too much evidence weighing against it right now. Layoffs have started to pick up, including job cut announcements at many of the country’s largest employers. While inflation may show some moderation in coming CPI reports, it is still extremely elevated from where the Fed wants it to be, meaning more hiking is coming. For all of the above reasons, anyone who needs or wants to sell their home within the next 1-2 years should consider selling now rather than waiting.
Selling your house fast in a transitionary market
One of the fastest and surest ways to sell your house fast in an uncertain market is to sell to a local and reliable investor. Local investors are always looking for properties that they can fix and flip or rent out. If you need to sell your house fast, this may be a good option for you. Here are some other reasons why you may want to sell to an investor:
Cash offer: Over 87% of buyers finance their home purchases. That leaves a lot of room for something to go wrong during the loan process. Buyers with conventional or FHA financing are looking for homes that are in move-in condition. Lenders will not approve conventional mortgage loans on homes with serious issues such as noticeable electrical problems, broken windows, and other significant deferred maintenance problems. Unlike regular buyers, investors buy properties for cash. Consequently, sellers do not have to worry about financing falling through, lender-caused delays, or the deal falling apart because the property did not appraise. Investors can buy uninhabitable, neglected, run-down properties that would not qualify for traditional financing.
As-is; no repairs: One of the great things about selling to an investor is that they are usually not picky about the condition of the property. You will not need to make any repairs before you sell because investors will buy your house as-is. Compare this with a retail property sale where a buyer may ask the seller to make repairs during the contingency period, likely delaying closing and creating a stressful situation for out-of-town homeowners for who would have to screen contractors and for homeowners on a tight deadline to sell.
Avoid paying realtor commissions or closing costs: Closing costs and realtor commissions seriously eat away at profits. In Greater Cleveland, seller pay about six percent of sale price to realtors. Closing costs also add up. Sellers can save thousands by selling directly to a reputable buyer.
Flexible closing date: You'll be able to choose the closing date that works best for you. Because no lenders are involved, investors can typically close in as little as two weeks or arrange a later closing date for sellers who need more time at the property.
Conclusion
When selling your home in Greater Cleveland, it is important to be aware of the current market conditions and trends in your local market. The Greater Cleveland real estate market is transitioning to a place where buyers have more leverage than in the past couple of years and sellers are much more flexible due to all the uncertainty. Sellers who want to sell quickly and painlessly might consider working with a reliable local investor who is familiar with your local market and can make a fair cash offer.
Curious about how investors are approaching the current real estate market? Check out this article where we were recently featured.
Disclaimer: The above is solely intended for informational purposes and in no way constitutes legal advice or specific recommendations.
