After a long two years, people wonder has the market shifted in favor of buyers? – at least in the DC area. All during COVID, finding a home has been challenging as bidding wars pushed offerss well over the asking price. It’s been hard for buyers but every market eventually rights itself and then swings in the other direction. Now, it appears that in certain areas, the market pendulum might slowly but surely be swinging back in a buyer’s market direction. It is not a buyer’s market yet, but the momentum has shifted.
In order to discern a shift, however small, from a seller’s to a buyer’s market in your area, let’s first take a look at what defines those buying/selling environments.
What is a Buyer’s Market?
Remember the days when the asking price on properties was just a starting point, and buyers frequently offered below that price rather than tens of thousands of dollars more? Remember when you could see a home and take the weekend to decide whether you wanted to make an offer?
Buyer’s markets occur when the number of homes for sale surpasses the number of people looking to purchase them. In a buyer’s market, houses take longer to sell and sometimes owners even offer incentives, like a home warranty policy or closing costs. These are the things to watch for to figure out has the market shifted in favor of buyers. You may be thinking that this is the time to buy your new home!
How Do You Know Has the Market Shifted in Favor of Buyers?
Are you wondering has the market shifted in favor of buyers? Here are some signs that today’s seller’s market may be shifting to a buyer’s market,
- HOMES ARE TAKING LONGER TO SELL When homes linger on the market longer, it is typically a sign that buyers are not as desperate to buy them—and sellers have lost some leverage.Realtor.com research indicates that, on a national level, in June the typical home spent 31 days on the market—five fewer days than the same time last year. That’s not perfect information from your perspective as a buyer, but the good news is that this frenzied pace is showing some signs of a slowdown. The seller’s market is not over yet, but the momentum is shifting.
- PRICE REDUCTIONS ARE HAPPENING Overall, U.S. housing prices are still rising. The median national home price for listings grew to a new all-time high of $450,000 in June, up 16.9% compared with last year. Home prices decreased in only three of the top 50 markets in June: Rockford, IL (-1.0%); Topeka, KS (-1.9%), and Cape Girardeau, MO-IL (-2.0%). The median sale price in Washington DC is $725,000 in July (up from $650,000 in May 2022 and $700,000 in June 2021,) The median sale price in Montgomery County was $600,000, down from $620,000 in May 2022 but still up from $555,000 in June 2021. But there is some hope to be found in the fact that the number of price reductions on homes is increasing. In other words, homes might be listed high, but they’re having to be reduced in order to sell. Sellers who priced their homes in early spring, expecting continuous rapid appreciation, are having to reduce their homes to get offers.
- MORE HOMES ARE BEING LISTED New listings increased in May and June 2022. In fact, the number of listings in June grew by 18.7% compared with a year earlier—and that’s the largest margin in the Realtor.com data history. This means that buyers have more choices in their home search. Inventory increased in 39 of the 50 largest U.S. metros compared with last year. Among the cities that saw the most inventory growth are Austin, TX (+135.4%), Raleigh, NC (+112.4%), and Phoenix (+106.7%). All of these markets experienced a booming seller’s market during the pandemic. Montgomery County inventory increased 6% from May 2022 but inventory is still down 16.6% from June 2021. In DC, listings are up slightly (1.2% from May) but still down 11.6% from June 2021. Affordability remains a concern, but homebuyers are finally beginning to have more choices.
- MORTGAGE APPLICATIONS HAVE FALLEN It’s simple: The fewer people applying for mortgages, the fewer buyers there are willing to make an offer on a home. Mortgage applications for both conventional and FHA/VA/USDA loans continue to be weaker due to the combination of much higher mortgage rates and the worsening economic outlook.“Higher interest rates are making borrowing costs more expensive,” explains Realtor.com Economic Research Manager George Ratiu. “As rates jumped from about 3.1% in December 2021 to 6.0% in June 2022, the typical monthly mortgage payment surged over 60% higher than last year.”As a result, “Some buyers have had to adjust their home search and still others have had to put their plans on hold,” adds Hale.Nonetheless, for buyers with deeper pocketbooks and more wiggle room, there is an upside: With fewer buyers out there and a greater supply of homes, they will have a lot more leverage with sellers than they had before.
Has the Market Shifted in Favor of Buyers? Then We Should Talk!
It’s important to remember that these higher rates won’t last forever – and you can always refinance. Let’s get you connected with a lender to identify your perfect price range and then just give us a call at 240-401-5577 or email us at @lisehowe.com to start you looking.