If you are on the hunt for a new home, you are hoping that you get the most home for your money. In a seller’s market, a couple of things will always happen. The first thing is the homes will be priced higher, and they will go faster. You don’t always have a choice when you can look, but if you do, you hope that it is a buyer’s market. There are some ways to be able to tell if it a seller’s market, so you can avoid looking at the best time possible.
How can you tell you are in a seller’s market?
Population Growth – If you are in an area that is increasing in population, it is a good sign that your market is in a seller’s market. People are moving in faster than they are moving out, so there will be fewer homes available. The competition for homes will be stiff, and prices will go up.
Job Growth – There are a lot of reasons why companies move to a new area. Some reasons include better weather, more space, better tax rates, or even government incentives. Whatever the reason for companies to expand or relocate, new people will be moving to the area to staff the new jobs. When there is an increase of new jobs, there will be a boom in real estate, and that will become a seller’s market.
Housing Starts – Housing starts is a term that describes the number of new homes that have started construction. When builders start constructing new homes, the supply goes up and fills in, and existing homes value go down. If several months of housing starts go down, it is a good indicator that it is becoming a seller’s market. The market is getting less saturated, and buyers are gaining the upper hand.
What key variables help you know it is a seller’s market?
Average Days on Market – As a seller, you want your home to go on the market as soon as possible. When an offer doesn’t come in the first few weeks, the perception among buyers is that something is wrong with the house, or the time of year isn’t right for the home. When you look at the area and the average days on the market are lower, you know that the city is in a seller’s market.
Asking vs. Final Home Price – Home buying is a bartering system. Unlike products that you buy at a grocery store, you determine the price of a home by the amount that someone will pay. When a list price starts high and keeps going down, the market is discovering that the house was priced too high for the time and place. On the other hand, when a particular location is getting offers more elevated than a list, it means that there is a shortage of homes and people are willing to pay more to get into one.
Home Prices over Time – Make sure to check the price of homes in the area where you live over the last decade. If the prices are continually going up, you are in a seller’s market.
Real estate is always on location, but it is also about timing. When you have the information, you can make a better decision when deciding to buy a home.