In many areas of the country, the high demand for homes is starting to outpace supply, creating what is known as a seller’s housing market. That means homeowners who are looking to sell have an increased likelihood of selling quickly or receiving an offer that is at the asking price or above.
It’s basic supply and demand. Unfortunately, it isn’t great news for potential buyers.
Recent National Association of Realtors data show that unsold housing inventory was just over a 4.7-month supply, below the 6-month supply needed for a generally balanced market. What this means is that based on the current sales pace, it would take 4.7 months to exhaust the supply of homes for sale on the market.
The problem posed by a tight housing supply is that it sparks bidding wars and raises selling prices, and the proof is in the numbers. Existing-home prices surpassed their all-time peak this spring and have climbed on average more than 5% nationally through the first five months of the year. The trend is even more pronounced in areas with severe home supply shortages.
This type of market can be frustrating for renters looking to buy homes and “move-up” buyers trying to purchase new, larger homes. They face minimal home choices, strong competition from other buyers and home prices growing faster than their incomes, especially those buyers with a smaller available down payment.
If you are thinking of buying a home this summer, don’t be intimidated by the real estate market. Overall, the fundamentals of the market remain as favorable for buyers as in past years. With the right help and a good plan, you could be in a new home by fall.
Here are a few tips for buyers looking to purchase in this summer’s seller’s market:
1. Work with a Realtor
When housing supply is tight, an attractively priced home will likely draw multiple offers. Find a Realtor, a member of the National Association of Realtors, who has experience with homebuyers and sellers in your desired purchase location.
For most Americans, real estate transactions are the most complicated, stressful and important financial moves they’ll ever conduct. While online real estate information can be helpful, a professional can provide you with insights and invaluable market information, including how fast homes are selling and for what price.
A Realtor can also work with you to put together a strong negotiation strategy to help make your offer stand out among others. Fewer homes on the market translate into more pressure to make quick decisions for buyers, so it’s best to be prepared with a well-thought-out strategy.
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