If you’ve been paying attention to the real estate market over the past few years, you know it has been a seller’s market. But is that going to change now 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 defined as a real estate market with approximately 6 months worth of supply of homes available for sale. In this type of market, neither buyers or sellers have an advantage with both being equal. Home prices also tend to stabilize, and there’s a healthy amount of homes to choose from on the market for sale.
At the start of this year there was a three-month supply of homes nationally and now inventory has increased to four months. This is positive news as we are heading in the right direction despite it not being quite there yet. It is important to understand 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 frenzied 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 and Your Moving Plans
Here’s how this shift impacts you and the market conditions 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 staying on the market longer- Since more homes are on the market, they’re not selling quite as fast. For buyers, this means you may have more time to find the right home while for sellers it means you need to price your house right if you want it to sell. If you don’t, buyers might pick some better valued options.
- Sellers are receiving 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.
- A Fewer number of buyers are foregoing inspections- As a buyer, you have more negotiation strength these days and that’s why fewer buyers are skipping home inspections. For sellers, this means you need to be ready to negotiate and make concessions as you deal with 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.
