Another way to look at the type of market is the interest of both sides: buyers want to keep their costs low and sellers want to maximize their profits. The current winner of this perspective is buyers, sellers are not getting the returns from this spring or even just a month ago during the summer market—dramatic changes to interest rates have changed buying power and increased the days on market for sellers. The result is less competition, a driving factor for a Buyers’ Market.
Here are four signs, used by Realtor.com
, that a shift has occurred:
1. MORE HOMES ARE BECOMING AVAILABLE. The months’ supply of inventory is now 2.2 increasing from this time last year. Inventory levels are up but only by 1.2%.
2. HOMES ARE TAKING LONGER TO SELL (Days On Market, DOM, are increasing). According to ICAAR’s MLS, the Days On Market have increased 21.4%
3. PRICE REDUCTIONS ARE INCREASING. Purely observational, since our MLS does not track the number of price adjustments, the number of price changes both around where I live and on the daily hot sheet are quite high and frequent. A sign that sellers have not understood the market from last spring is not today’s market.
4. MORTGAGE APPLICATIONS DROPPED. Not only have applications dropped, many financial institutions are beginning layoffs as they downsize staff in response to the drop.
I took the pulse of a handful of agents today on whether they thought it was a Buyers’ or Sellers’ Market and had an interesting response. A super majority agreed it is now a Buyers’ Market and buyers once again have power—one agent remarked she hadn’t written a full-price over in over two months, a sign of change from the spring market where the asking price was the starting price—but a few thought it was a “neutral” market, not conceding yet to the buyers' market vibes.
The market test above hit all 4 out of 4 which marks the indication of a Buyers’ Market but the inventory levels are still low, just barely breaking the numbers from last year. The other perspective to inventory levels not included in the analysis purely of "home inventory levels" is the number of buyers, which has also decreased drastically as interest rates climb.