Most people are aware that real estate conditions vary over time, but do you know how to identify a shifting market? Today, we’ll list seven key signs that indicate such a change.
1. Homes stay on the market longer. In other words, the average number of days listings spend on the market goes up during (and just before) a shift.
2. Inventory increases. If you don’t already know, the term “month’s supply of inventory” refers to the amount of time it would take for the market to run out of properties if no new ones were listed during that span. When the months’ supply of inventory goes up, this is an indication that we’re headed into a shift.
3. Sellers stop receiving multiple offers. In a seller’s market, it isn’t uncommon for a listing to receive several offers. As the market shifts, this trend comes to a halt.
4. There are fewer home sales. When the market begins to shift, not every listing will successfully sell. Many will sit on the market for some time, only to eventually expire.
5. Sellers begin making multiple price reductions. To combat the lack of market activity and incentivize buyers to make a move, many sellers who are listing at the start of a shift will reduce their property’s price a number of times.
6. Interest rates increase. Interest rates for conventional loans are currently anywhere between 4.75% to 5.65% and will continue to rise in months to come.
7. New home builders start offering incentives.
Right now, our local market is showing about five of these seven signs, meaning we’re likely transitioning into a buyer’s market.
We will continue to monitor the direction of the market but, in the meantime, if you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from you soon.