Is Your Dream Neighborhood in a Buyer's Market? 4 Signs to Look For
Navigating the housing market can be challenging, especially when determining if it’s a buyer’s market in your desired neighborhood. While the national market trends provide a general overview, local conditions can vary significantly. Here are four key signs to help you identify if your target area is leaning toward a buyer's market.
1. Increased Days on the Market
One of the most telling signs of a buyer’s market is an increase in the number of days homes remain listed before being sold. When homes linger on the market, sellers may become more willing to negotiate on price or other terms to close the deal.
According to Redfin, about 64.7% of homes listed in June 2024 were on the market for at least 30 days, up from 59.6% the previous year. This trend suggests that buyers are gaining more leverage, as properties are not moving as quickly as they did in a seller-dominated market.
2. Higher Cancellation Rates
Another indicator of a shifting market is the rate buyers are backing out of purchase agreements. Redfin reported that approximately 56,000 home-purchase agreements were canceled in June 2024.
These cancellations often result from buyers reconsidering their financial situations or finding better deals elsewhere. Increased cancellations suggest buyers are becoming more discerning, which can put additional pressure on sellers.
3. Growing Inventory and Seller Competition
Buyers benefit from a wider selection and potentially better bargaining power when more homes are available on the market. Increasing housing inventory can signal a shift towards a buyer’s market, as sellers must compete more to attract potential buyers.
In June 2024, the total housing inventory was 1.32 million units, a 3.1% increase from May and a 23.4% increase from the previous year, according to the National Association of Realtors (NAR). The unsold inventory represented a 4.1-month supply, up from 3.7 months in May and 3.1 months a year ago. This increase in available homes can lead to more competitive pricing and favorable conditions for buyers.
4. Price Reductions by Sellers
When sellers reduce their asking prices, it’s a strong sign that the market is shifting toward buyers. This often happens when homes are not selling as quickly as anticipated, prompting sellers to lower prices to attract offers.
In June 2024, about 19.8% of homes for sale had their prices reduced, the highest level for any June on record, according to Redfin. This was up from 14.4% the previous year. Additionally, 31% of home builders cut prices to boost sales, as the National Association of Home Builders reported. Price reductions indicate that sellers are becoming more flexible, creating opportunities for buyers to negotiate better deals.
What's Next --
Being aware of these trends will empower you to capitalize on favorable market conditions, potentially saving you money and helping you find your ideal home in a buyer-friendly environment. Keep an eye on local market data and consult with your local mortgage pro and real estate expert to stay updated on your area's latest mortgage programs and market developments.