If you’ve been keeping an eye on 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 select from. A more balanced market is 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 means the market is getting closer to balanced even though it’s not quite there yet. It’s important to note this inventory increase is not leading to an oversupply which would cause a crash. There’s still nowhere near enough supply for that to happen.
For now, this is still seller’s market territory. 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 will face when you move.
“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.” (source: Lawrence Yun, NAR)
Homes Are Sitting on the Market Longer: Since more homes are on the market, they are not selling quite as fast. For buyers, this means you may have more time to find the right home. For sellers, it’s important to price your house right if you want to sell.
Sellers Are Receiving Fewer Offers: As a seller, you might need to be more flexible and willing to compromise on price and terms. For buyers, you could start to face less intense competition since you have more options.
Fewer Buyers Are Waiving Inspections: As a buyer, you have more negotiation power now. That’s why fewer buyers are waiving inspections. For sellers, this means you need to be ready to negotiate and address repair requests to keep the sale moving forward.
Whether you are buying or selling, understanding how the market is changing gives you a big advantage.