The US housing market has been a seller's market for the past few years. But is that changing as inventory rises?
What Is a Balanced Market?
A real estate market is considered balanced when there is a supply of approximately five to seven months of homes for sale. In a balanced market, neither the seller nor the buyer has a clear upper hand. Prices tend to balance out as more choices become available. It's supply and demand.
Nationally, the year started with a three-month supply which has increased throughout the year to four months, a signal that the US housing market is moving closer to a balanced market. And yet, even with the increase in housing inventory, we aren't seeing a glut of inventory which would signal a crash.
The below chart shows you what home supply has looked like over the last 25 years up to today (data from the National Association of Realtors (NAR)):
Though the graph shows a seller's market, the momentum we saw in 2021 and 2022 is gone. The faster housing supply increases, the more affordability improves and the strength of a seller’s market wanes," said Mark Fleming, Chief Economist at First American.
What are the Implications for Buyers and Sellers
"Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis," said Lawrence Yun, Chief Economist at NAR.
Below is data compiled from NAR and Realtor.com which shows examples of the changes:
Homes Are Taking Longer To Sell: Buyers now have the latitude to more carefully think through their home purchase, as the threat of competition has waned. Sellers need to price strategically to entice buyers to consider their home over others.
There Are Fewer Offers: Sellers may need to consider concessions and repairs to pull an offer together. Buyers, as noted above, sense when there is a dirth of competition, giving them a bit more leverage.
Waiver of Inspections is Unlikely: Sellers should prepare for possible repairs or credits if their home is not in good shape. Buyers should still remember if it's a resale, they aren't buying a new home. This means a punch list of every small item on the repair list still isn't appropriate. Buyers should focus on material issues.
What Is Happening Locally?
The Jacksonville area is seeing an upward trend in inventory though the growth is less dramatic than what is happening nationally. If you look at all counties in the Greater Jacksonville area, inventory is now at 4.4 months of supply, up from 4 months of supply in January.
In Sum
The real estate market is constantly changing. If you have specific questions about a particular area in Jacksonville, please contact us directly. We're happy to talk you through what the numbers look like.
About the Author
Gwinn Volen is a REALTOR, Owner and CEO for The Volen Group, Keller Williams Luxury International, a top real estate team in Northeast Florida's Ponte Vedra Beach community with annual sales of over $100M. For real estate in Ponte Vedra Beach or the surrounding area, contact Gwinn Volen at 904.314.5188 or email thevolengroup@gmail.com.
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