Is the Housing Market Slowing?

16 Aug Is the Housing Market Slowing?

As appraisers, we are constantly analyzing data trends. For the last few years, the headline has generally been “It’s a Seller’s Market.” Simply put, the definition of seller’s market is when there are more buyers than sellers and sellers have the upper hand.  A seller can list at a higher price and attract a buyer and at times, even receive multiple buyers bidding over the list price.

We often look at recent closed sales as a barometer of what is selling for what and where the market is heading. While this is true, we equally need to analyze the pending sales and active listings to gain a pulse of current market conditions.

Recently, in most market areas, there has been an increase of days on market (DOM) for pending sales and active listings. All signs show that the some markets are slowing. When a market slows, typically inventory will rise.

Sometimes the slowdown is seasonal. Other times, there may be a market transition happening. With the rise of interest rates, the market may be feeling this impact with buyers having higher payments that may impact their price point. Given that the DOM has been increasing through spring/summer months vs. late fall/winter indicates something more may be happening in the market.

It’s important to state that a slowing market does not equate to a declining market. We may have seen already or may start to see news headlines that a bubble is forming. This can be click bait at times. In fact, a slowing market does not mean the real estate market is crumbling rather just leveling, fluctuating and simply stable.

What this means for sellers?

1) Pricing is paramount. When considering selling- get multiple opinions on estimated value by a qualified professional. A CMA by one or two agents and even a private appraisal is a good idea to cross check opinions of value.

2) Most buyers are more educated than ever and have a good pulse on the market and will not over pay for a property. Generally, a property has to be very unique and appealing for a buyer to buy outside of market price trends. This an exception compared to the norm.

3) Review not only the closed sales but also the number of active listings and pending sales. Example- If in a market area, there have been 10 closed “competing” sales over the past 6 months, 1 pending sale and 5 active listings- the active listings should be closely monitored. What was original list price? What’s the DOM of active listings? How do they compare to the subject property?

4) When a slow down happens, having a good marketing plan is key. A seller should have a detailed marketing plan in place in advance. Example- If after your home comes on the market and there have been 5 showings but no offers and little feedback after 3 weeks- what are you going to do? Plan ahead!

I am going to be curious to follow these trends as we enter fall. I hope this helps and let me know what you are seeing in your market areas as well!

Disclaimer: All information deemed reliable but not guaranteed. The information is meant entirely for educational purposes and casual reading only and is NOT intended for any other use.  This information is NOT intended to support an opinion of value for your appraisal needs or any sort of value conclusion for a loan, litigation, tax appeal or other potential real estate or non real estate purpose. This appraiser is NOT a qualified home inspector and any tips are for informative purposes only. If you’d like to obtain and order an appraisal for your specific needs, please contact Bryan at 530-878-1688 for more information.