“It’s a seller’s market.”
When you hear this phrase—from a neighbor or the talking heads on TV—it’s usually accompanied by knowing sounds and nods. The whole phrase “seller’s market” seems to take on an almost mystical quality.
We hate to ruin the illusion, but the truth is there’s no mystery around the meaning of “seller’s market.” It’s a market where there are more people wanting to buy homes than there are homes available. Simple.
In a seller’s market, sellers are more likely to sell their homes fast for the asking price or over. Buyers need to act fast and prepare for competition. It’s the law of supply and demand at work.
What’s behind the seller’s market in 2018?
As we write this, most of the U.S. housing market is a strong seller’s market. Inventory is at historically low levels while demand continues to climb.
These are some of the main drivers of the 2018 seller’s market:
- More Millenials are putting down roots and buying homes for the first time
- People who put off buying during the recession or who were still recovering are now back in the market
- New home construction hasn’t kept up with demand, due to a labor shortage and higher material costs
How to tell if you’re in a seller’s market
The housing market is fluid. We predict this seller’s market to continue throughout 2018, but the tide will one day turn. The time of year can affect supply and demand for houses. Or you might live in a part of the country that’s different from the national trend.
Look up the key metrics below to help determine if you’re in a seller’s market. Zillow’s Local Market Reports, Redfin’s Data Center, and Realtor.com’s Local Market Trends are all good resources.
- Inventory. Look at the year-over-year inventory change in your area. If it’s below 0%, that means there are fewer homes for sale now than last year. Lower supply + higher demand = seller’s market.
- Listing price vs. closing price. In a seller’s market, competition between buyers can mean the seller gets their asking price or even more. You can compare the listing prices and closing prices of homes in your area using the tools above. If most are selling at asking price or above, you’re in a seller’s market.
- Home prices over time. Rising home prices over time is a strong indicator of a seller’s market.
- Average days on market (DOM). This shows how long, on average, homes are listed before they’re sold. If homes are being snapped up in less than a month, you’re looking at a seller’s market.
So what does all this mean if you’re selling a house?
If you’ve been talking about selling your home for months (or years!) but haven’t taken action, it’s time to get it in gear.
A strong seller’s market won’t last forever and is an incredible time to sell your home. Fierce competition between buyers could mean you get your asking price or even more—or at least more than your bottom line. Homes tend to sell much faster in a seller’s market, too.
If you’re in Wichita and are even thinking about selling your home, contact Madrigal Team Gold for a valuation.
Buying a home in a seller’s market
Does a seller’s market mean you shouldn’t buy a house?
No. The right time to buy a house is more about your individual financial readiness, future planning and lifestyle needs than the ups and downs of the market. The area where you live factors in, too. Even with higher home prices, it may still be more advantageous to buy in your area rather than rent.
A seller’s market does mean you need to be prepared, do your research, and have an experienced buyer’s agent to help you navigate the process. You may need to save up a higher down payment to compete with other buyers.
Here are some ways buyers can compete in a seller’s market:
- Get a mortgage pre-approval letter. This shows sellers you mean business.
- Be flexible. With low supply and high demand, you may need to waive some contingencies and let go of some “must haves.”
- Expand your horizons. You may need to expand your search into neighborhoods and areas you hadn’t considered if prices and demand are too high. Your buyer’s agent can help you uncover hidden gems.
- Be willing to walk away if the price goes out of reach. This is hard to do when you love the house or you just want to be done. But it’s better to wait and find something else, or save up a while longer, than to put yourself in financial stress with payments you know, deep down, you can’t really afford.
- Get a great buyer’s agent in your corner. A local buyer’s agent that knows your market can come up with a strategy for competing with other buyers. He or she will know what you need to bid in order to compete, while at the same time making sure you’re not bidding more than you should for the value of the home. A trusted buyer’s agent won’t push you beyond your comfortable budget or rush you into a decision.
In Wichita, Madrigal Team Gold has just such agents. If you’re buying a home, contact us today for helping navigating any market.