As a Realtor, I’m often asked, “Is it a buyers’ market?” or “Are we in a sellers’ market?”
Sometimes it’s hard to know, but here are some characteristics to watch for to understand the market we’re in at any given time.
A sellers’ market is characterized by:
* A market that has more demand than supply, with low levels of inventory and a high absorption rate. In other words, there are fewer homes on the market and they sell faster.
* Sales prices in the top 5 % of the market are growing at or above 4% year over year.
* Positive yearly percentage change in both $1 million sales and absorption rate.
Conversely, a buyers’ market looks like this:
* An increase in days on market. It takes longer to sell a house in a buyer’s market. I like to show both buyers and sellers days on market data for the last six months and the last 365 days. If there’s a meaningful increase in how long it takes a house to sell now than before, we’ve got the first characteristic of a buyers’ market
* More than six months of inventory in a real estate market constitutes a buyers’ market. Though “months of inventory” may be a somewhat unfamiliar term, it simply means the number of months it will take to sell everything on the market at the current level of demand.
* A decline in median sold price. Median sold price is also a determinant of overall market condition. Though median sold price has nothing to do with the specific value of any given house (it doesn’t make a more valuable house worth less, or vice versa), it’s an excellent guide to help sellers’ price their homes more reasonably according to current market conditions.
So…what about here in Central Indiana right now? Are we in a buyers’ or a sellers’ market?
We are in a sellers’ market because there are fewer homes on the market and the ones that are priced right sell very quickly. Which is not to say you cannot successfully buy a home right now. You will have to get pre-qualified for a mortgage before you go to look at any homes because sellers will not look at an offer that does not have a pre-approval letter from your bank. You may have to compromise in terms of some of the things on your wish list, and you will have to be quick and creative to get your offer in quickly and make it as attractive to the seller as possible. But that’s why you have a smart buyer’s agent – to advise you and to do those things for you! And her services are free to you as a buyer!
Such a deal! Happy house hunting!