How you can tell what type of housing market your area is in.
Have you noticed a lot of negativity in the news recently about our housing market? There’s a lot of fear going around right now about a potential recession, and that fear has spilled over into concerns about our housing market. However, are these fears valid? I’ve noticed many of my clients have questions about where our market is heading, so to clear things up, I’m defining the three types of markets: buyers’ market, sellers’ market, and a balanced or neutral market.
First, what’s a buyer’s market? If there are seven months of inventory or more available, most experts would consider that a buyer’s market. For example, I’ve been helping a client sell a home in Downers Grove above $2 million. However, only four homes above $2 million have been sold in that area over the past decade, which means the area has a 2.5 years’ supply of inventory with just one home on the market. That is definitely a buyer’s market, so my clients will need to be patient and pull out all the stops to get a great deal.
"Every area’s market is unique."
Meanwhile, when there are about five or six months of inventory in a market, that is considered a balanced market. This is the norm, and homes tend not to appreciate or depreciate much in this environment.
Finally, a seller’s market is when there are fewer than five months of inventory in the market. 2020, 2021, and the beginning of 2022 were some of the craziest seller’s markets we’ve ever seen, so homes appreciated like crazy during that time.
We’ve been in a seller’s market for a long time, but now, we’re moving towards a more balanced market. That being said, every area is unique. If you have questions about this topic or anything else, please call or email me. I’d love to help you get the best deal possible!