Summer/Fall – 2017 (Article #2)
Many people are saying that it’s a seller’s market, but is that accurate? Yes and no. It depends on different factors. At the base of it all is supply and demand. If a lot of people want something, but there isn’t much of that something available, well, you’re going to pay a higher price. Remember the Tickle-me-Elmo Christmas craze years ago? There weren’t many dolls available, but too many people wanted them than could have them, so prices went crazy. Aside from the reality that the whole fiasco was a bit laughable, it still represents a reality that if there aren’t many houses available to buy, then the prices tend to rise, sometimes drastically. But, the reverse is also true that if there is an oversupply of something, then people have many choices, so the suppliers need to make their prices more competitive or favorable by lowering prices to attract buyers. The effect of an oversupply of properties tends to reduce values and may extend time needed to sell.
The concept of supply in real estate is called “inventory.” The real estate market has a certain number of properties for sale at any given time – sometimes a lot, sometimes only a few. So, when you hear that there is a “low inventory” in the real estate market, it just means there aren’t a lot of properties for sale. The way to tell if it’s a seller’s market, buyer’s market, or if the market is in balance (not tipped in favor of buyers or sellers) is to know the months of inventory. 1-4 months is a seller’s market, 5-6 months is balanced, and above 6 months is a buyer’s market. What is “months of inventory?” Well, if there are 2 months of inventory, it means that if no more properties were put on the market for sale, it would take 2 months to sell all of them.
Remember how I said that different factors influence whether it’s a hot market or not? It’s not as easy to just say it’s a seller’s market. Why? Because different price ranges have different amounts of inventory, and even different neighborhoods too! Recent statistics show that properties valued below $320,000 have an average of 3.5 months of inventory. So, recall that 1-4 months is a seller’s market. In this case, yes, the market is HOT! However, prices above $320,000 in the Spokane area have higher inventory, and in some price ranges it is significantly higher, approaching 6,7,8,9 months or more! That just means that it can take more time to sell those properties, and sometimes with steep discounts.
The real estate market is similar to grocery shopping in the sense that if you want the best deal for a good product, you need to be an informed shopper. However, it’s different in the sense that while grocery shopping is a normal part of life for most folks, real estate shopping is not. Because of this, it is crucial to have a professional who understands these concepts to help you be the best market participant that you can be. If you’re buying, you need to know if the price is right, or if you can get a better deal. If you’re selling, you need a plan that is clearly outlined by your real estate agent to help you meet your goals.
The time of year also impacts the real estate market. As we approach fall, in addition to tree leaves dropping, property values typically do too. These seasonal variations don’t necessarily indicate a disaster, but they usually do indicate a change in goals and motivation for people. It’s a time of year when things slow down a bit. You can still accomplish your real estate goals at any time of the year, and at any price range no matter what the inventory, however, you may need to revise your plans and develop a different strategy.
Real estate is less about “selling” and more about relationships. In order to plan your next move, I’d be glad to build that relationship together to create a plan and implement an effective strategy to reach your real estate goals. If you’d like to know the specific value range and inventory for your property contact me for a detailed analysis. I look forward to hearing from you. In the meantime, visit my Facebook page for updates and news at www.facebook.com/CodyKerrRealtor/.