If you’ve been following the housing market in recent years, you’re aware that sellers have had the advantage. However, with inventory on the rise, could that be about to change? Here’s what you need to know.
What Is a Balanced Market?
A balanced market is typically defined as one with a five-to-seven-month supply of homes available for sale. In such a market, neither buyers nor sellers have a distinct advantage, leading to more stable prices and a better selection of homes. After years of sellers holding the upper hand, a shift toward a balanced market would be a welcome change for those looking to buy. But is that where the market is headed?
At the beginning of the year, the national supply of homes was at three months, but it has since increased to four months. While that might not seem like a significant change, it does indicate the market is moving closer to balance, though it hasn’t quite reached that point yet. It’s crucial to understand that this rise in inventory isn’t leading to an oversupply that could trigger a market crash. Even with the recent increase, supply remains far too low for such a scenario.
The graph below, using data from the National Association of Realtors (NAR), illustrates where inventory has been in the past and where it stands today:
At the moment, we’re still in a seller’s market, though it’s not as intense as it has been in recent years. As Mark Fleming, Chief Economist at First American, puts it:
“The quicker housing supply grows, the more affordability improves, and the strength of a seller’s market diminishes.”
What This Means for You and Your Move
Here’s how this shift affects you and the market conditions you’ll encounter when you decide to move. Lawrence Yun, Chief Economist at NAR, explains:
“Homes are staying on the market a bit longer, sellers are getting fewer offers, and more buyers are demanding home inspections and appraisals. Inventory is also clearly increasing nationwide.”
The graphs below, using the latest data from NAR and Realtor.com, illustrate these changes.
Homes Are Staying on the Market Longer: With more homes available, properties aren’t selling as quickly. For buyers, this provides more time to find the perfect home. For sellers, it’s crucial to price your property competitively to attract buyers. If not, they may opt for better-priced alternatives.
Sellers Are Getting Fewer Offers: As a seller, you might need to be more flexible with pricing or terms to finalize a deal. For buyers, this means you could face less intense competition since there are more options available.
Fewer Buyers Are Waiving Inspections: Buyers now have more leverage in negotiations, which is why fewer are waiving inspections. For sellers, this means you should be prepared to negotiate and address any repair requests to ensure the sale goes through.
How a Real Estate Agent Can Help
However, this is only the national overview. Market conditions can differ significantly depending on the local inventory. That’s why it’s important to rely on a local real estate agent for insights specific to your area.
Whether you’re buying or selling, staying informed about market shifts gives you a significant advantage. Your agent has access to the latest data and local knowledge, ensuring you understand what’s happening and how to navigate it effectively.
Bottom Line
The real estate market is constantly evolving, so staying informed is essential. Whether you’re buying or selling, understanding the move toward a more balanced market can be beneficial. If you have any questions or need professional guidance, feel free to reach out.
