So … How’s the Market?
Whether I’m in line at the grocery or drugstore or at a breakfast downtown or at a charity function or wherever, the question I’m always asked remains the same: “So, how’s the real estate market?”
The best answer I can give is: It all depends. If you want to buy a home in Midtown Montgomery, the market is great. Because inventories are still high (the number of homes available for sale), sellers are still having to be very competitive with their prices. And while interest rates are beginning to edge up, they’re still knock-your-socks-off affordable — in the 4% range!
But if you want to sell, it’s still rough going. As of February 24, we had 13.9 months worth of homes available for sale. That’s waaaaay too much inventory.
In any given market, inventories will fluctuate based on area and price range. The National Association of REALTORS® considers a balanced market to be a six month supply of homes. If it takes longer than six months to sell, it is thought to be a buyer’s market and less than six months, a seller’s market. Most buyers and sellers probably feel inventory equilibrium is more like a three month supply of homes.
Inventory has a direct impact on price. During the national housing bubble, demand decreased, supply ballooned to 4 million houses and prices dropped like a proverbial rock. As the market has recovered, economic conditions have improved, banks have loosened their requirements, interest rates have remained low and foreclosures have slowed. Gradually, the inventory has been reduced to approximately 2 million houses.
When demand is constant but inventory is reduced, price tends to increase because the same number of people are trying to buy a smaller number of homes. You may have heard tales of multiple offer situations in other markets recently. That even is happening in Midtown Montgomery on really wonderful magazine quality homes priced really right. But it’s far from the norm here.
However, based on the low mortgage rates that have been inching up each week in 2013 and an improving consumer confidence level, we are experiencing some increase in demand. More and more buyers are not just looking but buying!
Over time, that will decrease inventories in Midtown. And with inventory decreasing, buyers will begin to see prices inch up from their current bargain-basement levels. It’s already too late to buy at the very bottom (you don’t know where it is until you bounce off of it!). After all, hindsight is 20/20. But it’s not too late to get a good deal on a great home. Take action now. I’d hate to see you among the ranks of the victims of supply and demand who will be looking wistfully back at 2013 and saying to themselves, “If only I’d…”
Sandra Nickel has been listing and selling residential real estate for over 29 years, most with an intense focus on Montgomery’s Midtown neighborhoods. Sandra serves on the Mid-Alabama Coalition for the Homeless, the Cloverdale Business Coalition, Historic Southview, the Volunteer and Information Center, Landmarks Foundation and her own neighborhood Garden District Preservation Association.
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