Still Sellers' Market
After two years of pure craziness on the real estate market, we start to see signs of a longer term reversal. Or is it just a quick correction?
As there’s continuous talk about the real estate market cooling off from the peak reached during the pandemic, you may be wondering what that means for your plans to sell your house. If you’re thinking of moving, be aware the market is still anything but normal. Despite a steady supply of homes for sale this year, 200+ new listings a day in the Greater Rochester, Buffalo and Syracuse area, there’s still a shortage of homes on the market. That means the market continues to favor sellers.
An indicator called Months of Inventory (MOI) is calculated by determining the number of homes sold per month and dividing by the total number of properties for sale on the last day of the month. Basic laws of supply and demand regulate the market. In a stable real estate market, the inventory is usually between 4 and 5 months of supply. Anything higher gives buyers the upper hand market and the prices fall, anything lower puts sellers in control and the prices rise.
Due to record low inventory over the last two years we have been locally and globally in a red-hot sellers’ market. The blue section of the following graph highlights just how far below a neutral market inventory still is today.
Months of Inventory
However, there are signs of upcoming changes. The mortgage rates are rising, and that affects buyers’ appetite. In our region we see between 60 and 80 price drops daily. We also see an average of 25 properties daily returning on the market. That usually happens when buyers back out of a deal because they see a new property that has more amenities and is better priced. When you combine that with the rising inventory I mentioned at the beginning and natural market slow down after summer, you can see the months of supply indicator leveling out and I expect it to start trending upwards in coming months.
To recap, today’s housing market still favors sellers. If your agent prices your house properly, you will successfully sell taking advantage of high valuations. While buyer demand is declining, properties priced right are still selling fast, within days of being listed on the market. There is still an opportunity to sell your house, but the time to take advantage of this market is running out.
If you plan on buying, better days are on the horizon. It is still competitive but not insane. I just got an accepted contract for an FHA buyer a couple of weeks ago, this was impossible three months ago.
