The Market is Talking
One question I often hear “Is this a buyer’s market, or a seller’s market?”
to which I generally respond, “It depends.”
While real estate activity typically remains robust through October, the die has been cast regarding the 2017 market. We do not anticipate any significant changes to the market until things pick up again next spring.
So how has the real estate market performed in 2017? In two words: “Very well.” The trajectory of the market has remained consistent since the market recovery began in 2012. From a broad perspective, over the last five years we have experienced high buyer demand, low listing supply, historically low interest rates and a steady increase in the median sale price. However, a closer look indicates a market that has more complexity.
Location, as always, has a significant influence on housing value and demand. All areas benefited during the housing recovery and have seen improvement in market conditions and prices, but some are performing better than others. Higher demand areas, such as the inner ring suburbs, have seen more activity than the more distant suburbs. Location will always be king, hence the cliché “location, location, location.”
However, it is the listing price that provides the starkest example of how much the general market differs. As illustrated above, the price ranges are performing differently. To measure this, the metric Months Supply of Listings is used. This statistic measures how many months it would take for all current listings to be sold if current demand remains the same and no new listings entered the market. This dynamic measurement considers both the raw number of available listings along with current buyer demand. It is generally accepted that a “balanced” market has 5-6 months supply of listings.
The Months Supply of 2.4 months most recently cited in the news encompasses all price ranges and hardly tells the whole story. No matter the location, there is a vast difference in supply/demand when one compares the market at $250,000 to the $1 million plus market. One question I often hear “Is this a buyer’s market, or a seller’s market?” to which I generally respond, “It depends.” Right now, home sales below $500,000 favor the seller, and the $1 million plus price range is a buyer’s market.
From my observations, many consumers that are not actively buying or selling believe the entire housing market in the Twin Cities favors the seller; this is not true. It is important to understand this before deciding to buy or sell. You should consider market conditions in your location and price range when developing your buying/ selling strategy.
Furthermore, it is imperative to know the dynamics affecting your specific property or one you wish to purchase. While national aggregators such as Zillow, Trulia, and Realtor.com may provide some fun and general information, these large entities only provide an automated valuation model (AVM). These valuations are drawn from limited data and are typically inaccurate as a result. There are a multitude of factors that influence price and market time, many of which are not considered in an AVM. To learn more about the many market dynamics affecting your neighborhood, I encourage you to seek the counsel of your Fazendin REALTOR.
Lastly, I want to say thank you to our clients and friends that have supported Fazendin Realtors over the years. October will mark our 53rd year. As a local business, we are aware that it is your loyalty that has sustained us. For this, we are grateful.
Andy Fazendin, OWNER / BROKER