Fictional Seller Sally bought her home about eight years ago for $190K.

Three years ago, Sally realized her home was worth $240K and was pretty happy about that.

Last year, Sally was astonished to conclude that her home was likely worth $290K.  Wow! 

Sally just landed a new job out of state and is getting ready to sell and the most recent comparable sales indicate that her home is likely worth $310K in the current market.  Sally is elated!

Sally lists her home for $309,500 and has had quite a few showings during the first three weeks on the market, but has not received any offers.

Would it surprise you that Sally decides to go ahead and reduce her list price to $299K?  Would it surprise you if three weeks later Sally reduces the price again to $289K?

It wouldn't surprise me.

While some sellers might think about $299K and $289K relative to the possible current value of $310K, Sally is thinking about $299K and $289K relative to...

[1]  Her original purchase price of $190K.

[2]  Her conclusion a year ago that her home was likely worth $290K.

Certainly, Sally would be delighted if she could sell her home for $310K, but she will also be very happy to sell it for $299K or $289K.

Moving forward through the balance of 2022 and in 2023 I suspect there will be some sellers who will happily sell for a bit less than the market might indicate their house is worth, as that "lower" price is still much, much higher than they could have imagined their home was worth for most of the time that they have owned it.

 

This likely won't be all sellers, and perhaps not even most sellers, so it might not cause an overall shift in home values... but some sellers will likely be quite willing to reduce their price if their home does not sell in a timely fashion.