If you’ve been following the housing market in recent years, you’re likely aware that sellers have enjoyed the upper hand. But with inventory on the rise, is the market finally shifting towards a balance? Here's what you need to know.
What Is a Balanced Market?
A balanced market typically has a five-to-seven-month supply of homes for sale, where neither buyers nor sellers have a distinct advantage. Prices tend to stabilize, and buyers have a healthier selection of homes to choose from. After years of sellers dominating the market, a balanced environment would be a welcome change for many potential movers. But is that really where we're heading?
At the start of this year, the national housing inventory stood at a three-month supply. Now, it’s increased to four months. While this may seem like a small change, it’s a sign that the market is moving closer to balance, even if it hasn’t arrived yet. It's important to note that this increase in inventory is not leading to an oversupply that could cause a market crash. Even with recent growth, there’s still not enough supply for that to happen.
The graph below, using data from the National Association of Realtors (NAR), illustrates where inventory levels have been in the past compared to today:
As of now, we’re still in a seller's market, but it’s not as intense as in previous years. Mark Fleming, Chief Economist at First American, explains:
“The faster housing supply increases, the more affordability improves, and the strength of a seller’s market wanes.”
What This Means for Your Move
This shift in the market has several implications for both buyers and sellers. Lawrence Yun, Chief Economist at NAR, notes:
“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.”
Let’s break down these changes:
- Homes Are Sitting on the Market Longer: With more homes available, properties aren't selling as quickly. For buyers, this means you have more time to find the right home. For sellers, pricing your home correctly is crucial to ensure it sells in this changing market.
- Sellers Are Receiving Fewer Offers: Sellers may need to be more flexible with pricing or terms to close deals. Buyers, on the other hand, might face less competition, giving you more choices.
- Fewer Buyers Are Waiving Inspections: Buyers now have more negotiating power, leading to fewer waived inspections. Sellers should be prepared to negotiate and address repair requests to keep sales on track.
How a Real Estate Agent Can Help
Keep in mind, this is the national trend, and local markets can vary significantly. That’s why it's essential to rely on a local real estate agent for insights into your specific area.
Whether you're buying or selling, understanding these market changes can give you a significant advantage. Your real estate agent will have the latest data and local expertise to help you navigate the shifting market landscape.
The real estate market is constantly evolving, and staying informed is key. Whether you're buying or selling, understanding the movement towards a balanced market can help you make smarter decisions. If you have questions or need expert advice, don’t hesitate to reach out to your local real estate agent.
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