A Flat Market Is Not Bad

If you caught our article last month about the Housing Equilibrium and how the market has been correcting itself to stabilize. We are definitely out of the hot crazy market where homes are on the market for just hours before offers are being written. The market is starting to reflect something much more familiar now that we have done some spring cleaning by getting all the short sales off the market.

During this time of high activity we had a housing inventory of weeks compared to the housing inventory now that falls at a little over 2 months. For those of you who are not familiar with the terms Housing Inventory, it is the length of time it will take to sell all of the homes currently listed on the market if we keep selling at the same rate and no new homes are listed.

This is often a key measurement tool to determine whether we are in a sellers market or a buyers market. A sellers market is common when there is very little inventory and nearly every listing is getting multiple offers, sometimes to the tune of 50 offers for one home depending on the area you live. 

It is called a sellers market because the seller is in a better place. They are getting many offers for their home and they can pick and choose who they want to work with and why. If you're a buyer in a sellers market, your offer could not be accepted simply because you asked for something another buyer did not.

The flip side to this is a buyers market, where there are a lot of listings and houses aren't moving very quickly. This puts the buyers in a favorable position because the sellers are now competing against each other to get their home sold. If a buyer is looking between two homes and seller A is willing to do all the home repairs while Seller B only wants to do half of the repairs, the buyer can feel comfortable choosing between which home they want to buy as opposed to hoping their offer gets picked. This natural competition creates a market where offers come in below the asking price since the buyers are looking for a good deal. In contrast, during a sellers market, offers need to be at asking price or higher to stand any chance of being accepted.

The other thing we look at when evaluating the type of market we are in is the number of homes sold and for sale. Logic implies that in order for us to have a larger inventory, there needs to be more homes listed than those sold, if we are recovering from a sellers market.

This is where we are at now. I won't say it's definitively a buyers market, but what we can clearly extrapolate from analyzing the data is our market has flattened out. This is normal, we aren't in any danger of repeating any bubble or drop.

Are you a buyer who was scared away from so many competing offers a few months ago? If you are, now may be the time to start looking at homes again because the market is now in your favor!