Is this a good time to Buy or Sell a Property?

Real Estate market cycles are never ending… we go from Seller’s Markets to Buyer’s Markets with Balanced or Neutral Markets in between; and the other way around. Predicting exactly when a market will shift it’s impossible, but there are several signs that indicate where it is trending. In a few I will describe each market and what you can expect…

It is important to point out that in the same area you may have pockets, price points or types of products that are behaving differently. That’s why we look at the micro-markets instead of going with the general trend when we study a specific property.

To determine the market we are in, we can look at either absorption rate or months of inventory based on closed sales. I prefer to use Months of Inventory based on closed sales… since it is the most commonly used in our area.

What is a Buyer’s Market?

A buyer's market happens when available homes for sale exceeds demand, giving buyers an advantage over sellers in price negotiations. In a buyer’s market prices may be affected, motivated sellers most likely will reduce the price to get their property sold. This is a great market for low down payment buyers or deals with more contingencies than usual.

We say that we are in a Buyer’s Market when we have More than 9 Months of Inventory based on Closed Sales.

What is a Seller’s Market?

A seller’s market refers to a situation in which demand exceeds available homes for sale, giving sellers an advantage over buyers in price negotiations. This is a market in which multiple offers scenarios are common and cash is king. In this type of market, prices tend to go up.

We say that we are in a Seller’s Market when we have less than  6 Months of Inventory based on Closed Sales.

What is a Balanced Market?

A balanced market is when there is a healthy number of buyers and sellers in the market. Housing prices tend to remain stable, sellers need to be realistic and buyers have several homes to choose from but can’t expect that low ball offers will be accepted.

We say we are in a Balanced Market when we have between 6 and 9 months of Inventory based on Closed Sales.

And now..
What are Months of Inventory? it measures how fast all the existing homes on the market would last assuming that no more listings are added and that the rate at which homes sell is a constant figure based on the average of the last 12 months of sales. (To assess sales trends, we can also calculate demand over six, three or even one-month periods.)

Just a little disclaimer…

There are different criteria to determine the kind of market we are in, but the one I mentioned: under 6 months is a seller’s market, 6 to 9 months a balanced market , and over 9 months a buyer’s market, I think is the one that reads the market better…

In summary…

In a seller’s market the seller has more control of the pricing because the supply is lower than the demand… on the contrary, in a buyer’s market, there are more properties for sale than buyers in the market.

Keeping an eye on your specific market is very important to surf the waves. If you are buying or selling you need to understand in what type of market we are, so you don’t leave money on the table.

If you want to know if a specific area or property is in a buyer’s, seller’s or balanced market don’t hesitate to contact me.