“Boy, its really a Buyer’s Market, isn’t it?” I’ve been hearing this more and more often, and the truth is, it IS a Buyer’s Market. But if you’re a buyer – or more importantly, a seller – what does that mean for you?
Well first, let’s look at a few stats. In previous articles, we’ve discussed the concept of ‘market saturation’ – a figure determined by taking the number of homes currently on the market and dividing by the number of homes that have sold within the past 30 days. For example: if, on a given day, there are 500 homes listed in Lynchburg, and within the past 30 days 100 have closed, that would give us a 5 month supply. If we stopped listing homes on that day, in theory, it would take us 5 months to be ‘sold out’ of our inventory.
We measure how balanced any market is by how many months of ‘inventory’ we have at a given point. Traditionally, a well-balanced market will have a 6-month supply of homes. Much more than 6 months indicates an increasing buyer’s market, much less indicates a strong seller’s market.
As of April 1, 2008 there were 1802 active residential listings in our MLS and 163 homes sold in the month of March, giving us an 11-month supply of inventory. Last year as of April 1st there were 1083 residential listings and 257 closed sales in March, for an inventory of 4.2 months. Quite clearly the balance has shifted somewhat.
So back to the original question – what does this mean if you’re a buyer or seller TODAY? If you plan to buy a home in the next few months, understand that while you do have greater control over the process, it does not mean every seller is desperate and will accept significantly reduced offers. Just because there are more options does not mean the actual VALUE of homes is any less.
If you’re a seller, the good news is that people are still buying and selling homes, and that’s not going to change. But if you are serious about selling your home, be prepared to make it stand out – listen to your agent and honor their suggestions. Above all, realize that you MUST be competitively priced and in better showing condition than your competition.