How to Navigate the Changing Real Estate Market
LOCAL EXPERTISE WILL HELP YOU NAVIGATE THE CHANGING REAL ESTATE MARKET
When determining whether to buy or sell, people should consider the state of the housing market. That is because the reality is their home is an investment, and not just a place to live. As an investment, it may be the biggest one most people will make during their lifetimes. Like any investment, there are good and bad times to buy and sell. When it is a good time to buy, it is usually a bad time to sell and vice-versa. Hence, the terms “buyer’s market” and “seller’s market.”
To determine the state of the housing market, one should look at the months’ supply in your housing market. Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, 6 months’ supply of homes is associated with moderate price appreciation. A months’ supply greater than 7 tends to push homes prices lower more rapidly and a lower level of months’ supply tends to push home prices up more rapidly.
A buyer’s market occurs when there is a high level of months’ supply (generally greater than 7), comparable sales prices are lower than active listing prices, and homes stay on the market for months or more. A seller’s market occurs when there is a low level of months’ supply (generally less than 7), comparable sales prices are higher than active listing prices, and houses are sold in days or weeks. A neutral market favors neither the buyer nor the seller as months’ supply is normal compared to previous months/years, comparable sales prices are close to active listing prices, and homes are in contract within 30 – 45 days from the date of listing. During a neutral market, sales numbers stabilize and median sales prices over a span of time are flattened
For the past two years, Reno/Sparks was experiencing a seller’s market with record low inventory and record-breaking sales prices. What market is Reno/Sparks currently experiencing?
In July 2022, Reno/Sparks had 1,348 active homes on the market. A 157% increase in inventory from July 2021, and approximately 3.5 months’ supply of homes. The median days to contract was 25. A 316.7% increase from July 2021. This data suggests that the market is shifting from a seller’s market to a neutral market.
Neutral real estate markets are balanced. Typically, interest rates are affordable and the number of buyers and sellers in the marketplace are equalized. The scales do not tip in either direction, meaning the market is normal without experiencing volatile swings. Resetting the Reno/Sparks market to a neutral market, benefits both the buyer and the seller as it stabilizes home prices and market.
During this market adjustment, it is essential that you as the buyer or seller understand the housing market you are operating in. A REALTOR® is a great asset for helping buyers and sellers understand their housing markets. For buyers it is essential to understand the market data to ensure that you make the most competitive offer possible. For sellers it is essential to understand the market data to ensure that your home is properly priced in the adjusting market.
When you are buying or selling a home in a changing market, a REALTOR® can act as an expert guide providing you with up-to-date information and statistics on local market conditions, which can differ substantially from national market conditions and what you hear in the media. Working with a REALTOR® gives you access to your local multiple listing service (MLS) giving you access to all active and sold listings in your market. A great realtor will use this data to evaluate all listings that meet your criteria, alert you to new listings as soon as they come on the market and provide data on recent sales to ensure your home is properly priced to sell or your offer to buy is as competitive as possible.
A knowledgeable real estate agent will know what contractual and financial disclosures, deadlines, forms, legal documents, inspections, and reports are required in your market, helping you avoid delays and costly mistakes. It is also helpful to have an individual who understands the real estate jargon, can speak the language, and can interpret the contracts.
A real estate professional will guide you through the home buying and/or home selling process with an unbiased eye to help meet your objectives. Agents are great resources when you have questions regarding local amenities (parks, schools, trails, skiing, hiking, etc.), contractors, events, utilities, zoning rules, and more. They can also provide advice on home maintenance or suggestions for upgrades that will enhance your home’s resale value.
A real estate professional who is representing you will look at the transaction from your perspective, helping you negotiate a purchase agreement that meets your needs and ensures that your interests are protected. Buying or selling a home can be an emotional journey. Having a third party who can be objective helps you stay focused on the issues most important to you when emotions run high and threaten an otherwise sound transaction.
Finally, when you are interviewing local real estate agents in a changing market, ask if they are a REALTOR®, a member of the National Association of REALTORS®. Every REALTOR® must adhere to the REALTOR® Code of Ethics, which is based on professionalism, serving the interests of clients, and protecting the public.
Reno/Sparks Association of Realtors, “Market Statistics July 2022,” https://www.rsar.net/business-reports-tools-1
First Team, “What is a Buyer’s Vs. Seller’s Market,” https://www.firstteam.com/what-is-a-buyers-vs-sellers-market-in-real-estate/
National Association of Realtors, “Inventory and Months’ Supply,” https://www.nar.realtor/blogs/economists-outlook/inventory-and-months-supply