If you’ve been watching the housing market over the past couple of years, you know sellers have had the upper hand. But is that going to shift now that inventory is growing? Here’s a breakdown of what you need to know.
What Is a Balanced Market?
A balanced market is generally defined as a market with about a five-to-seven-month supply of homes for sale. In this type of market, neither buyers nor sellers have a clear advantage.
Prices tend to stabilize, and there’s a healthier number of homes to choose from. After many years, when sellers had all the leverage, a more balanced market would be a welcome sight for people looking to move.
The question is – is that really where the market is headed?
After starting the year with a three-month supply of homes nationally, inventory has increased to four months. That may not sound like a lot, but it means the market is getting closer to balance—even though it’s not quite there yet. It’s important to note that this increase in inventory is not leading to an oversupply that would cause a crash.
Despite the growth lately, there’s still nowhere near enough supply for that. The graph below uses data from the National Association of Realtors (NAR) to give you an idea of where inventory has been in the past and where it’s at today:
For now, this is still seller’s market territory – it’s just not as fierce of a seller’s market 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 Move
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.”
The graphs below use the latest data from NAR and Realtor.com to help show examples of these changes:
Homes Are Sitting on the Market Longer: Since more homes are on the market, they’re not selling quite as fast.
For buyers, you may have more time to find the right home.
For sellers, it’s essential to price your house right if you want it to sell.
If you don’t, buyers might choose better-priced options.
Sellers Are Receiving Fewer Offers: To close the deal, you might need to be more flexible and willing to compromise on price or terms. Buyers, on the other hand, could face less intense competition since they have more options.
Fewer Buyers Are Waiving Inspections: You have more negotiation power now as a buyer. And that’s why fewer buyers are waiving inspections. For sellers, you must be ready to negotiate and address repair requests to keep the sale moving forward.
How a Real Estate Agent Can Help
But this is just the national picture. The type of market you’re in will vary significantly based on the amount of inventory available. So, lean on a local real estate agent for insight into how your area stacks up.
Understanding how the market changes gives you a significant advantage, whether buying or selling. Your agent has the latest data and local insights, so you know exactly what’s happening and how to navigate it.
Bottom Line
The real estate market is constantly changing, and staying informed is essential. Understanding this shift toward a balanced market can help, whether you’re buying or selling. If you have any questions or need expert advice, contact real estate professionals at KM Realty Group LLC.
