Spring is here, which means the most active time of year for our real estate market has begun.
Usually, we see more homes listed and more buyers come out of the woodwork during this season. This year, though, we’re not seeing as many homes come on the market as we have in years past. For example, from January through March in 2016, the level of new inventory rose by 11% compared to the same time period in 2015. This year, the level of new inventory only rose by 2% compared to the same time period in 2016.
The demand portion of that trend is represented by new contracts, or buyers going under contract to purchase homes. In 2016, new contracts from January to March rose 10% compared to the same time period in 2015. In 2017, new contracts from January to March only rose 5% compared to the same time period in 2016. As you can see, there was still an increase, but it wasn’t as significant.
Simple laws of economics suggest that when you have equal or more demand for homes and not enough inventory, it creates a scarcity in the market that drives up the price of homes, which is what we’re seeing. Every metric we use to track the health of our industry is pointing us toward a seller’s market. The sellers that we currently represent are selling their homes very quickly— sometimes for more than their list price. On the flip side, the buyers we’re working with are asking why there aren’t any new homes coming on the market.
April and May are the two months where we traditionally see the most homes come on the market, so if we don’t see an uptick in inventory soon, it probably won’t happen in 2017 at all. If you combine this with the fact that interest rates are rumored to rise even further, it’s going to create market conditions that could frustrate the current pool of buyers.
If you’re a buyer, remember to stay patient and consider implementing your buying strategy slightly earlier to factor in the competitiveness of our market so you’re ready to act when you do find the right house.
If you’re a seller, the principles of positioning your home correctly and differentiating it still apply. In other words, you still need a strategy to attract the most buyers to get the best price possible. If you plan on buying a house on the back end, you’ll need to stay mindful of the competitiveness of our market and follow the same advice I gave to buyers.
If you have any more questions about our market, feel free to reach out to me. I’d be glad to help.