What type of real estate market are we in?

July 9, 2008 · Filed Under Video Blog for Spokane Real Estate 

Spokane Real Estate Video Blog #02

Aaron Mallo video blogs about whether we in a sellers’ market, a buyers’ market, or a balanced market. The “Month’s supply” of homes guides us. If you want to share your opinion please email your feedback to AaronMallo@AaronMallo.com and visit Spokane Real Estate Video Blog List for all the Aaron Mallo Spokane Real Estate Video Blogs.



When looking at whether it’s a buyer’s market, a seller’s market or a balanced market, one of the best indicators of who has the upper hand in negotiations and who dictates the tone of the market is the “Month’s supply of homes” or absorption rate of homes.

Think of the “month’s supply” like this, suppose a grocery store puts 100 cans of soup on their shelf and they sell 20 cans of soup per month, there is a 5 month supply of soup before the grocery store runs out. If we can assume no new homes come on the market, measuring real estate month’s supply is the exact same, we can see the pace the homes are selling at.

In general, a 5 months supply or less is a seller’s market.

Sellers have the upper hand and they tend to stand firm on their prices and buyers don’t get a lot of concessions from sellers such as help with their loan closing costs.

What we had 2 years ago was a 2 or 3 months supply of homes which was a VERY hot seller’s market and there was a lot competition from buyers to get their hands on anything they could.

A 5 – 7 months supply is a balanced market where supply and demand keep pace with each other.

Buyers are buying for the proper reasons, buyer’s are taking a long-term view of their home purchase and aren’t buying simply to try and make a quick buck. Sellers are more flexible on contract terms, and homes in good condition that represent a good value sell quickly, and those that don’t sit on the market.

With a 7 or more months supply, there is an ample choice of properties and the advantage shifts to the buyer.

Buyer’s are more able to negotiate on price and for the extras such as the having all of their loan closing costs covered, and to pick up that nice top-of-the-line washer/dryer set that the seller wanted to keep.

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