People ask me all the time whether we’re in a buyer’s or seller’s market. In our industry, the answer usually depends on the season.
In the spring, we typically see more of a seller’s market, and that was the case this year. Right around the beginning of July it started to slip, and we started to see the days on market creep up. Houses were sitting on the market a little longer and they weren’t selling for the same prices that we saw in the spring.
That trend has continued into the fall. How do we know this? We use what’s called the ‘absorption rate.’ The absorption rate measures the sales pace versus the current active inventory. An absorption rate of four to six months is considered a balanced market. Anything less than four months is considered a seller’s market. Anything longer than six months is considered a buyer’s market. Right now, we’re seeing things push a little bit closer to that six-month mark. That would currently make our area a buyer’s market.
How does that impact property values? The longer things stay on the market, the less they stand to make. As far as the current inventory goes, there aren’t a lot of new homes coming on the market, but there isn’t a whole lot of activity on what’s being listed. I’ve also discovered that here in Baltimore and Carroll County, there’s typically a 5% correction in the price from the spring market (2nd quarter) to the fall market (3rd quarter).
Interest rates are extraordinary right now, and this has created huge buying opportunities for anyone looking to purchase a home. The Fed has left them untouched, but they’re rumored to be hiking them up in the 4th quarter.
What does all this mean for buyers and sellers? It depends on your particular situation and what your goals are. If you’re a seller, there aren’t a lot of new homes coming on the market. There are opportunities out there, you just have to be more strategic about pursuing them. If you’re a buyer, now is a great opportunity to act due to the combination of low interest rates and the seasonal decline in prices.
If you have any more questions about the current market, please don’t hesitate to reach out to us. Just give us a call or send us an email, and we’d be happy to help you!