The first thing people ask me is, “what’s the Sunshine Coast Real Estate Market doing now?” Well, it’s turned. The top has been reached, and properties are now selling for less.
In early 2022 I wrote an article that if an investor wanted to sell their investment property in 2022, they needed to do so before August 2022 & I was pretty fitting. Around the middle of the year, things started to slow. With interest rates now rising monthly based on the experience, I assume the market will continue to slow and decline throughout 2023.
I also assume that around Sept 2023, many people trying to hold on will be under considerable mortgage stress and need to sell. I am already hearing about people with mortgage payments starting to struggle now.
Keep in mind I am just a real estate agent. Not an economist, but this is similar to what happened in the global financial crisis. I remember six months into the global financial crisis, people said. Indeed, it can’t be like this for much longer, and it went on for another two years. Everyone had to adjust & we all need to start to adjust now for the new normal.
Suppose you are planning to sell in 2023. I would assume that your home will sell for more in Jan than it will sell for in March and will sell for more in March than it would in Sept. It’s just my guess, but it’s a little common sense. Rates keep going up. Buyers’ lending capacity is being reduced.
Interest rates are rising; the Sunshine Coast, Real Estate Market, is declining. Buyers are taking a lot longer to act as they know they now have time.
WHAT DOES MARKET DECLINE MEAN?
Let’s look at this in a little more detail. What does it mean when I say the market is declining? When someone wants to sell, it is common for them to have several sales agents do a free sales appraisal where they attend the property and gives an opinion on what they believe the property would sell for.
The challenge here is sales agents are looking at what sold over the last six months. In a declining market, these sales figures are now wrong. If a home sold for $990,000 in Oct 2022 that’s comparable to yours, that same home would not sell for $990,00 in Jan 2023. It will sell for less. What’s hard for anyone to know is how much less. Fewer buyers, buyers buying slower, buyers negotiating harder. Buyers are looking for value.
Journalists are saying the Sunshine Coast Real Estate market has declined by 8%. But they may be claiming this on older data. What I am seeing right now is the decline is more like 15%.
Look at this screenshot. Bought in 2021 for $800k, the market kept booming in 2022, and it has now just sold for $700k. So all that incredible capital growth over 2022 has been wiped out.
SALES AGENTS AND PRICING A PROPERTY
We have a saying in the industry that a sales agent bought the listing. We mean the owner chose that agent because they told the owner it would sell for the highest price. The sales agent has either done this on purpose, hoping the owner will reduce the price over time, or the sales agents just never knew the possible sale price in the first place and just guessed a price.
In a declining Sunshine Coast Real Estate market pricing, the property is challenging for every sales agent. Because pricing a property should be priced based on recent comparable sales, but those prices are now out of date and wrong.
If you have a sales agent in your home who has given you a price, ask them to walk you through comparative examples so they can show you how they logically came to this figure and what months those comparable properties sold in.
DON’T CHOOSE AN AGENT WHO GUESSES THE HIGHEST SALES PRICE
I tell all my clients no one has ever chosen me as their agent because of the sales price I’ve told them. I’m usually wrong. No one knows the exact price a property will sell for. It’s a big trap and a very tempting one. You might speak with three agents that will give you a price ranging from $700k to $900k. The temptation is to choose the agent who told you the highest price when you need to engage the agent who has demonstrated they have the best sales process – to get you the best outcome in a market that is now very challenging.
NOT ALL SALES AGENTS ARE THE SAME
Did you know anyone can do a three-day course, become a real estate agent in QLD, and sell people’s most valuable assets? That’s alarming—just three days.
When I was helping my daughter buy her first home last year, I was shocked at how many rookie sales agents conducted themselves. In a busy market, anyone can sell real estate.
A simple example is an “offers over” pricing strategy is excellent in an increasing market but not as effective in a declining one, which can now be seen with a property advertised for offers over, selling for less.
In a declining Sunshine Coast Real Estate Market, it’s more important than ever to ensure you engage a sales agent that has been in the industry for a considerable time. One that has sold in a challenging, declining market. But one that also has common sense, drive, and a proven sales process.
SELLING IN 2023 OR HOLDING?
If you need to sell the home you live in and are buying and selling in the same market, the price decline won’t affect you. While you may not be able to get $990k now and instead would need to accept a sale price of $850k, it would be the same for the property you buy, so the net result is the same.
If you wait for the market to improve, you may be waiting years, but the property you choose to buy would also be improving in value.
I’ve always bought and sold around my life, not around the market. I suggest you do the same. If you feel you may be heading towards mortgage stress, it would be better to make plans now for sale, as later in the year could be too late.
SELLING YOUR INVESTMENT PROPERTY IN 2023
First, you need to consider what selling your investment property will achieve. You also need to realise that very few investors are buying right now & the ones that are buying are looking for extreme value.
Suppose you have an investment property and need to sell. In that case, you will now get the best results if you do this close to the tenant’s lease end date because this will allow you to target buyers who would like to live in the property & will usually pay more than an investor looking for extreme value.
Sure you can sell with your tenants in a place where the lease won’t end for some time, but keep in mind this will dramatically reduce your buyer pool as you need to either sell to an investor who would be looking for extreme value or to a buyer happy to wait for the lease to end and why would they be interested when they could buy something else they can move straight into.
SELLING WITH A TENANT IN PLACE OR EMPTY?
In the boom, you could sell with tenants in place and the home poorly presented. If you sell now with tenants in place and they present the property poorly, it would be tough to get buyers engaged, and if you do, it would be for less. Much less. So it would help if you thought this through very carefully. Is the home saleable with the current tenants, how is it presented, and what is the lease end date?
Tenants can also refuse to allow you to have open homes. This is again where an experienced sales agent is essential. They would be able to meet with your tenants, see how the property presents and give you advice about your options.
With the market slowing, properties are taking longer to sell, so a tenant must agree to open homes more often. If they present the home poorly, this can stop a sale as people can’t see past the mess.
BUYING IN A DECLINING SUNSHINE COAST REAL ESTATE MARKET
I’m in the industry, and I’ve never bought or sold by trying to time the Sunshine Coast Real Estate Market. If you are looking to buy in 2023, get busy buying. Sure, if you buy something in March 2023, you may be able to buy better in Sept 2023, but in the big scheme of life and long-term investing, does it matter that much? If you currently rent and now decide to buy. I advise buying ASAP so you can start paying down your home loan instead of dead money on rent.
If you are buying or selling on the Sunshine Coast and need friendly advice, contact me anytime.
