For nine consecutive months, existing-home sales have declined, while home prices and interest rates have risen. Potential buyers have been put off by the housing affordability crisis.

First-time buyers were left out of the real estate market because of the frenzied pace at the beginning of 2022, combined with the affordability crisis. According to the NAR’s REALTORS® Confidence Index, the average home had 5.5 offers during the spring market.

There were about a quarter of buyers who paid all cash for their homes, leaving potential FHA or VA loan applicants behind. Compared to the previous year, first-time buyers made up just 26% of the market, the lowest share NAR has ever recorded. There should be about 40% of first-time buyers in a healthy historical market.

According to one projection, first-time buyers will have an easier time buying in 2023. A higher interest rate (which may decline) and a higher price will require first-time buyers to earn higher incomes. However, with fewer buyers, there is less competition, which increases the chances of an offer being accepted.

Homeowners may just stay put due to the recent increase in mortgage rates. Although this is bad news for potential buyers and the inventory crisis, remodeling contractors could benefit from it. The home equity of homeowners has steadily grown as home prices have risen. Typical homeowners with a decade of ownership have $210,000 in equity. Although equity could make a move easier, the homeowner may not be willing to move.

There has been a strong demand for homes in many markets over the past two years, which has led to offers quickly exceeding list prices in many instances. Some homeowners did not see the need to stage and make easy repairs to sell their homes.

REALTORS® are currently pricing homes competitively and 24% are selling above list price, with 21 days on the market as the typical number. Nevertheless, the need for home staging may be revitalized if there is greater equilibrium between buyers and sellers. Almost half of REALTORS® who work with buyers agree that staging increases the dollar value of the home offered to them. Four out of five buyer’s agents say that it is more likely to visualize the buyer in the future property, according to buyers’ agents. Why not present the product in the best possible light when attracting a buyer?