Playing Chicken

We’re all familiar with the game of chicken… Whether you’re running full speed at another person or cavorting around in a pool, the idea is that you wait for the other player to balk. When they do, you win. Is the current state of the real estate market eerily reminiscent of a game of chicken? 

Perhaps. 

Both buyers and sellers are waiting for the other to act first in a way that benefits the other. Currently, buyers have little incentive to act first or fast. Lending powerhouse Freddie Mac reports that not only are buyers facing ever growing home prices, but they’re topped with high mortgage rates. Rates have risen again, this time to 6.32% for a 30-year fixed-rate mortgage in the week ending Feb. 16.

On the flip side, sellers no longer have the selling power they did a year ago when lines for open houses wound around the block. Homes were seeing multiple offers and sales prices well above asking. Today? The lot of available homes is up 70% for the week ending Feb. 11 compared to the same week last year. 

So, who will break first? 

Data shows that sellers may be the chickens here, so to speak. Realtor.com Chief Economist Danielle Hale says, “January data shows that the share of home sellers making a price reduction was more than twice as large as one year ago.” This is accurate, seeing as 15.3% of sellers in January slashed their prices compared with 6% a year earlier.

In this strange game of chicken, it’s seeming like buyers might have a slight advantage. 

Tell us in the comments: are you in a hurry to buy, or are you up for a game?