The housing market has favored sellers for years now. That good old-fashioned metal balance scale has been leaning heavily in favor of sellers with very few homes on the market and tremendous demand. Yet, with more homes coming on the market and falling demand, that metal balanced scale has slowly but surely been moving away from that hot seller’s market to a balanced market, one that does not favor sellers or buyers.
Everybody has been talking about not enough homes on the market, dating back to 2012. That lack of supply has fueled the frenzied real estate market; that is, until 2018. The supply problem has evolved into a demand problem. While the supply of homes has increased quite a bit this year, it still remains below the long term average. The real issue is not that there are way too many homes on the market, as in prior slowdowns; instead it is the fact that housing demand has dropped precariously.
Demand was a staggering 18% higher in July of last year, and mortgage rates are now at their highest rate since 2011. With prices and mortgage rates rising as they have been for nearly a decade, it's no wonder that buyers are not jumping as quickly to purchase.
This does not mean the current market favors buyers, it is still an extremely
slight seller’s market. The current expected Market time is 85 days. In a balanced market, homes stay on the market between 90-120 days. The difference now is that there are more choices now. The typical home is no longer flying off the market. Buyers no longer need to trip over themselves to purchase, and can approach the market methodically and at a more relaxed pace.
Sellers: Accurate pricing is fundamental in order to find success. Ignore the recent headlines of record median sales prices. That does not mean that homes are continuing to appreciate TODAY. Demand has dropped considerably, meaning fewer showings and fewer potential offers. Pricing at or close to the
Fair Market Value is the wisest formula for success.
In the past two weeks, demand for homes above $1.25 million decreased by 17 pending sales, down 5%, and is now at its lowest level since the end of January. The overall market time for homes priced above $1.25 million is now 210 days, up 27% compared to last year. Year over year, luxury demand is down 16%, while inventory is up 6%. See the graph below for expected market time across specific price ranges.
