Agents both locally in our office and throughout the country, on all media platforms, are buzzing right now with a similar refrain: “What is going on with this market? Is it shifting?” This is a valid and timely question for sure. For the first half of 2018, the market was defined by low inventory and high demand—creating a sellers’ market. What we are currently seeing is that rising interest rates and increased supply are making the market more balanced.
Most consumers think there are only two markets: sellers' markets and buyers' markets. There is actually a third market, which we may currently be entering, and that is a “balanced market”. A balanced market is categorized by 4-6 months of supply. In layman’s terms this means, if no further homes come on the market, and the market doesn’t change, it will take the current supply of inventory 4-6 months to sell.
So what does this mean for us? It means that sellers need to adjust their expectations. Multiple offers and taking your pick of offers is certainly in the rear-view mirror. It makes pricing “ahead of the market” much more important as buyers will be more sensitive to price with rising rates. For buyers, it means there will be more homes to choose from. It also means that your Real Estate Professional should be focusing more at the last 90 days of sales versus the last 6 months which is the more standard time-frame. This is because the market in the last 90 days is much different than the spring market which was 6 months ago…
Overall, a dynamic and shifting market dictates that you work with a fiduciary. A fiduciary is someone who is legally and ethically obligated to put their clients’ needs above their own. Whoever you decide to work with in this current market, make sure they explain Real Estate Cycles and ask them, “Where are we?”. A fiduciary should always advise you based on your needs and goals, not their own.
If you have questions about anything Real Estate related, we are here. We are here, and at the ready!