As is true with all financial markets, the real estate market changes due to several factors. Sometimes the market benefits the seller and at other times it is on the buyer’s side. Knowing what type of real estate market your location is in is very important in lining out a strategy that will lead to a successful transaction.
For sellers, knowing the signs that the market is on your side can assist in setting the correct price and determine the most efficient way to market the property.
A key indictor as to the status of the real estate market is the inventory supply level. The supply inventory is measured by the number of months all existing homes on the market would last assuming no additional listings are added.
Generally, inventory levels below six months means it is a seller’s market, anything near six months is neutral and higher than six months would signify a buyer’s market.
If home prices continue to rise month after month continuously, it is a good indicator that we are in a sellers’ market. Due to the demand of homes being higher than the supply, home values will continue to increase until the market becomes neutral.
Conversely, if there are more homes for sale on the market than buyers, the competition to attract the relatively low number of people shopping for homes will drive the price down.
Days on market
Days on market (DOM) are the number of days a home is listed prior to being sold. A low number of days on market is indicative of a sellers’ market. This is usually a result of significantly more buyers looking for homes than there are properties for sale.
While there are factors that affect why a home won’t sale, the DOM is the average number of days it is take all homes to sell in an area.
In line with the low number of days on market, receiving multiple offers on a home that is marketed and priced well is a huge sign that we are in a seller’s market. This is also a result of a higher amount of inventory than available homes on the market. In a seller’s market, the buyer’s will be competing to purchase the home that they want.
The multiple competing offers will likely lead to you getting at least your asking price for the home and lead to a quick sale.
Foreclosures rates are low, and flippers are high
During a seller’s market, foreclosure rates are very low as it is easy for seller’s who may have a need to relieve themselves of the asset to do so. They will have little trouble selling the property in a hurry. During a buyer’s market, the home may have negative equity, necessitating the sale of the home at a loss, which is something many cannot afford.
At the same time foreclosure rates are low, there will be a high number of investors in the market looking to purchase a home for a great deal and make some quick money by selling and reaping the profits from the appreciation.
As always, the Novak team is here to assist you with any questions you may have. For information on how the market is performing, be sure to check out our Snohomish County Market Report.