3 things Experts use in determining if the Real Estate Market is considered a Sellers’ Market or a Buyers’ Market!
Currently we are hearing on the news that it is a Sellers’ Market and is now becoming more of a Buyers’ Market! This can get confusing especially when every area is different! Many times what is happening in one area may not be happening in the area you currently live.
Knowing some of the ways experts factor this is very helpful. Here are 3 indicators we look at that will help you know how the market in your city is. These 3 points give a good indication of how consumers dictate the outcomes to these questions!
1) What is the absorption rate of homes on the market vs homes sold? For example on Friday, Santa Maria had 165 residential homes listed for sale, 87 residential homes in escrow under contract, and in the last 30 days 75 homes closed and transferred title to new owners!* We look at how many homes are on the market, how many have closed and divide closed homes into available homes. This gives us our absorption rate of 2.2 meaning that we have a 2.2 month inventory supply. It is a sellers’ market if there is less than 6 months of inventory and, a buyers’ market if we are over the 6 months of inventory.
2) How long do homes stay on the market? A year ago, we were seeing homes come on the market and it would be very common to have multiple offers shortly after the sign went up. The price of the home did impact how quickly a home sold, however, our on the market time for even homes considered move up homes was just about 30 days! Now our homes that are considered starter homes are taking longer to sell, and buyers have time to think before writing the offer and they are expecting more for their money. We are seeing longer days on market and also price reductions which just as little as 6 months ago was not as frequent.
3) Another indicator that is tracked is list price of a home to sale price of a home. Once a home is listed, we look to see what the final sale price is to determine the market trend. It was common for an offer to come to the seller at their asking price or within 1% of asking price. Now I am seeing buyers willing to request a substantial savings and some sellers are accepting the offers.
There are other indicators as well, but these three are the fastest and easiest to monitor. If you would like to get instant updates on what is happening in your neighborhood, just sign up for free information at www.understandmyneighborhood.com and you will receive instant alerts for homes just listed, price drops as they occur, properties that go under contract, and closed properties with the information of how much they sold for compared to how much they were listed for plus how long they took to sell. As always we aim to be your Real Estate Resource!
1*(these numbers are primarily resale homes and a few new homes, but do not include all new construction sales. Information was obtained using the Flex Multiple Listing Service and is for information only).