I’m starting my Spring 2022 update with the above graphic because I believe the statistics really do speak for themselves. A “balanced” market, meaning there is equal leverage between buyers and sellers, is considered to be 6 months of supply. You’ll see in the statistics above furthest to the right, in our area, there was less than half of a month’s supply in January, which is worse than the last 5 years. YES, we are in a heavy seller’s market, as we have been throughout the last several years. Inventory has been in a downward trend for a while now, and buyer’s need to be prepared for the hectic landscape that is our current market. It is crucial for buyers to be educated on the state of the market and the home buying process prior to getting started in order to be fully prepared to beat out the competition.
What’s causing this lack of homes? A number of factors are contributing to the inventory crisis, starting with that fact that for the last 10 years less homes have been built in comparison to historical averages. The market crash in the mid 2000’s had a big impact on the home-building industry, ultimately forcing many builders and contractors to pursue other careers. Over time, this slow down of building spanning between 2006-2012 has created a lasting impact on the housing market. With such evident lack of inventory, many home owners have considered selling but have no where to move, ultimately causing a lethargic market, and many resorting to adding on to their current space to make ends meet. Finally, historically low interest rates over the last couple of years have driven larger pools of buyer (particularly first time buyers) to pursue a home purchase, leading to multiple offer situations.
All this said, buyers do not fret. This is still our typical spring market, and though chaotic there are strategies we can use to ultimately make you more competitive while protecting your best interests. Be sure to hire a savvy Realtor to walk you through your options! There are creative solutions to partially waive some contingencies, and loop holes that can protect other safety nets that you’ll want to know about before getting started. One mindset in particular I’d like to address – some buyers have mentioned “waiting out this market.” I don’t see any quick resolution to our inventory crisis and interest rates are increasing pretty dramatically. Most experts predict prices will continue to increase year over year for the foreseeable future. All this being said, your purchasing power (and budget) will likely decrease as the year continues on and throughout next year. I’d recommend getting started sooner rather than later if possible.
Now moving on to specifics – what to expect in this hot market? Most turn-key homes are selling 10-15% over list price – especially in the single family home category. It is crucial that your agent pulls recent similar sales so that you know what the market data supports, and just how high above that you may need to go based on data from homes that have recently gone under contract and/or sold. Also, contingencies are being waived right and left, and this is why it is so important to have a great agent who understand your individual situation as a buyer and what you can waive and tweak so that you are competitive but at the same time not putting yourself in a risky situation.
Side note – the condo market is still recovering from the slow down it experienced during the pandemic. If you are interested in purchasing a condo, now is a great time while inventory levels remain higher than normal! I’ve already seen an uptick in condos selling, and I anticipate this will only increase as more and more people begin returning to the office so time is of the essence if you want to capitalize on the current situation.
And finally – sellers, obviously this is a GREAT time to sell! But don’t think just because you list the home it will automatically go for a large percent over. You still need to make sure the home is priced reasonably, and that the space is showing-ready to attract buyers and drive multiple offers. A great agent should offer to come by and give you room-by-room advice on how to prepare.
Wishing everyone a great week ahead! What a nice month to finally start enjoying some warmer weather.