Limited supply and high demand helped push home prices higher over the last few years, but all that could change with the upcoming spring 2019 real estate market. According to a recent article from HousingWire’s Jessica Guerin, shifts in inventory levels and cooling price growth could signal the comeback of the buyer’s market.
According to the article, more than 500 real estate agents were surveyed by Credit Suisse, many of which reported an increase in home buyer traffic. The survey found that traffic was up 1 point overall from the previous month in February; however, it was down 11 points when compared to the same month last year. Nevertheless, real estate agents are seeing more optimistic buyers, due to the expected uptick in supply, Guerin reports.
“Credit Suisse also said its survey revealed an uptick in incentives in markets like Las Vegas, Houston and Denver, and that Charlotte, Jacksonville, Florida; and New York – Northern New Jersey saw the largest gains in traffic,” Guerin writes.
Real estate agents in specific markets offered insightful commentary on the trends they are seeing and what they can expect for the spring market. For example, here are a few summaries from Credit Suisse compiled by feedback of agents in their respective markets:
In Atlanta, agents cited an “early start to the spring market with buyers motivated by year-over-year price declines and improving inventory levels. Days on market remain low with multiple offers on quality inventory, though we note 52% of our respondents saw greater-than-anticipated incentives.”
In New York—Northern New Jersey, “demand is concentrated at the more affordable price points, including first-time and multi-family properties. Given the potential for further home price moderation, buyers seem willing to wait longer before purchasing.”
In Charlotte, “traffic levels met agents’ expectations as rising employment opportunities encourage in-migration. That said, closings are constrained by the lack of inventory at more affordable price points.”
Furthermore, the majority of agents who responded to the survey noted a sequential increase in home prices for the first time since August. Be that as it may, the anticipated arrival of more homes on the market could help balance things out and give home buyers the ability to avoid bidding wars.
The persistent challenge it seems, lies in the supply of housing priced below $300,000. While it is true that existing home inventory is likely to rise significantly as sellers plan for the spring market, there remains a very strong demand for homes in the lower price points. Those with “starter homes” or modestly-priced homes will likely be able to sell quickly, and for a good price, with the market poised as it is. However, buyers in just about every price range could benefit from more homes entering the market.
How Buyers Benefit from More Housing Inventory
As supply increases to meet demand, there is more competition among sellers. As a buyer, you could have 10-20 homes to choose from instead of 5-6. This puts more pressure on sellers and gives buyers more negotiating power.
Regardless of the price range in which a buyer is shopping, if more homes are hitting the market in that range, buyers will have the benefit of taking their time to consider more options. In a seller’s market, bidding wars are more common and buyers usually need to be ready to move quickly once they find a home they like. There’s more pressure to put in a strong offer as soon as possible, which can sometimes lead to buyer’s remorse. With greater inventory levels, buyers can feel less rushed to make a decision, thereby giving them the chance to really weigh the pros and cons of each potential property.