Are We Encountering A Balanced Real Estate Market?
If you’ve been keeping tabs on the housing market over recent years, you know it has been a seller’s market. But is that going to change now that we are seeing that inventory is growing? Here are some details of what you need to know.
The Definition of a Balanced Market
A balanced market is most simply defined as a market with around 6 months worth of supply of homes available for sale. In this type of market, neither buyers or sellers have a clear advantage over the other with both being fairly equal. Home prices also typically stabilize, and there’s a good amount of homes to choose from.
At the beginning of this year there was a three-month supply of homes nationally and now that has increased to four months. This is good news as we are heading in the right direction despite it not being quite there yet. It is important to mention that this increase in inventory is not leading to an oversupply that would cause a crash. Even with the recent growth there’s still nowhere near enough supply for that to happen. At the moment it is still a seller’s market, but it’s just not as crazy as it’s been over the past few years. As Mark Fleming, Chief Economist at First American, says: “The faster housing supply increases, the more affordability improves and the strength of a seller’s market wanes.”
What This Means for You
Here’s how the correction impacts you and the market conditions that you’ll face when you move. Lawrence Yun, Chief Economist at NAR, explains: “Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.”
Homes are on the market longer- Since more homes are on the market for sale, they’re not selling as fast. For buyers, this means you may have more time to find the right home. For sellers it means you need to price your house correctly if you want it to sell. If you don’t, buyers might choose some from the other appropriate priced options.
Sellers are getting fewer offers- As a seller, you may need to negotiate more and compromise on price or terms to close the deal. For buyers, you could begin to see less intense competition since you have more homes to choose from.
Fewer buyers are foregoing inspections- As a buyer you have more negotiation power these days which is why fewer buyers are skipping home inspections. For sellers, this means you need to be ready to negotiate and make repair requests to keep the sale moving forward.
Whether you’re buying or selling, understanding how the local market is changing gives you a big advantage. Contact me today for the latest data and local insights so you know exactly what’s happening and how to navigate it.
