Most everyday customers ask my team and I, “How is the real estate market?” Well, this is a very good and also difficult question to answer. You see, we understand the wanting to know this answer as home purchase is one of the largest financial decision most people make in their lifetime. We understand people like to know how their financial investment is doing. Here at Zimmerman Property Group, we do our best to always educate our customers on what we are seeing in the market, what we are seeing in certain areas, what to look for in the economy such as:, the GDP, interest rates, and unemployment. And even after all that analyzing, we still are giving an educated opinion on where we are in a real estate cycle. In fact, we might feel that certain times are good to buy or sell and we might be wrong because the real estate market is exactly that, a market!
What this article is going to do is be transparent and honest to the reader on what leading indicators we feel you should know in order to answer the question, “how is the real estate market?” I am writing this in hopes to give the reader an understanding of what indicators to look for so that they have an educated opinion on how the market is.
First let’s view what a housing cycle looks like-
There are 4 lanes to the cycle
The top- we are not always certain if we are at the top, going up, or coming down but, we know that prices are at a all time high and we are somewhere in there
A downturn – where you start to see longer market times, more inventory, less demand, and a great indicator is more price reductions
The bottom – similar to the top in we are not ever sure if we are at the absolute bottom, or still falling, or on our way up
Then recovery – when supply and demand start to regain some stability and indicators are on the rise
Look at the annual numbers and see how the demand stacks up from years past…
Windermere Real Estate Chief Economist Matthew Gardner said the lack of homes for sale in many markets has pushed prices to unsustainable levels, but that’s changing as more inventory hits the market, with sellers fearing that rising rates could slow demand. ~ courtesy of Inman news
Same with sales. As you can see, we are at an all-time high for pricing and, with the interest rates (you will see later) we are at a time where it has never been more affordable to own a home.
Months of Supply
We are still in a seller’s market (nationally) trending towards a balanced market.
Inventory is starting to slowly rise. According to National Association of Realtor’s most recent existing home sales report, inventory was up to 4.4 months of supply in September, slightly above the 4.2 months of supply reported in September 2017 ~ courtesy of Inman news
Bouncing around the bottom since 2011 and are trending on the way up. This is going to raise the cost of living for the buyer.
“Across many parts of the country, we’re seeing a jump in the number of new listings as sellers attempt to time the market, fearing that rising interest rates will cause home prices to adjust down,” Gardner said. ~ Inman news
U.S. employment just dropped to 3.9% which is the lowest since 2000
You see, we are at a time in history like we’ve never seen before. All the indicators are showing that the market is stable and the reality is that there is still high uncertainty and pause in the current market. So, to answer the question of “how is the real estate market?” The honest answer is, it depends on where you are in your life and what is most important to you.