It is hard to believe that it is October already! As we close the books on September we continue to monitor the market shift that has been slowly affecting the real estate market since the 4th quarter of last year. Although the early spring market this year was quite strong again, it was short-lived. We saw the lowest housing inventory between April and May this year and then the shift kicked into gear again and we have seen a steady increase in inventory since.
If you observe the graph below you will see what has made this year so unique. Last year, housing inventory in the SMSD hit its lowest point in April when only 1.2 months of housing was available. From April on, the inventory slowly rose a little each month all the way to the end of the calendar year. Take a look:
This year, we have observed that the market has followed that same path, that is until September. You can see that in September, housing jumped up from 1.7 months in August to 2.9 months of inventory. As with most housing cycles, a shift usually starts slowly and then suddenly, all at once, the shift is felt.
Even at 2.9 months of inventory we are still technically in a seller’s market. But for how long? Often the transition from a seller’s market to a balanced market (where neither buyer nor seller has an advantage) can be quite swift. So what is causing the surge in inventory? An overall drop in demand, it appears.
When you compare Sept 2017 to Sept 2018, the number of homes actively for sale went down a bit in 2018. To be exact, the number of homes for sale dropped from 1139 last year to 991 this year, or a 13 percent drop. As I have said before the real story is in the number of homes to go under contract. In Sept 2017, 332 homes went under contract while this year only 227 homes went under contract. That is a 31.6 percent drop, or almost 1/3rd fewer homes to sell. Take a look:
The most common question that I am getting right now is, “Why is the market slowing down?” And the answer changes for everyone based on location, condition, and price. As it always does. The difference is that for several years, the robust seller’s market has been forgiving when it came to price and condition. Meaning- when there are no homes for sale, buyers pretty much have to take what they can get which allows the seller to get away with more. Now that the tables are turning, buyers can and are expecting a home in better condition than what has been allowed over the last few years. They are also expecting a good value. Buyers have more housing options these days which allows them to scrutinize the price as well.
The long and short of it is that the real estate market is getting tricky again which requires more work from the seller and more skill, experience, and market knowledge from the listing agent.
If a home sale in the next year is inevitable for your family, and getting as much equity out of your home is a goal of yours, please contact our team today to create a plan that will do exactly that. We are already business planning with selling clients for 2019, and the more head’s up that we have, the better we can serve our clients and provide them with the results that they desire.