We’ve heard that the market is hot for sellers right now and that enticed us to start thinking about selling our home…but we’ve also heard that there’s a shortage of inventory—probably why the market is so hot for sellers right now.
Is this truly how our market is right now? If it is, that makes it a little bit of a double edged sword for us. Should we sell and make great money off the equity we have in our home? But if we do, will we be able to find another house that we like if there’s such low inventory? What do you recommend in a market that’s like ours is now?
Donna and Frank, Grand Junction
Donna and Frank,
Great question! Our market is the tale of two markets…those properties under $300,000 and those properties priced over $300,000 (particularly those properties priced over $400,000). First let’s look at the absorption rates we currently have in the market. You may ask, what are absorption rates? Well, the absorption rate is the number of months it would take to sell all the currently listed homes in the market. This is where we get months of inventory and that number is important as it helps provide a clearer picture of just how much inventory is available in any given price range and theoretically will allow you to better predict future trends in pricing and sales activity. I have heard it said that a healthy market is somewhere between 3 and 6 months of inventory! Less than 3 months of inventory lends itself to being a seller’s market where the supply is short and the demand is high. More than 6 months of inventory would mean you are entering a buyer’s market, meaning more inventory than there is demand and the buyer theoretically holds the upper hand in negotiating power.
As of October 1, 2017 properties priced between $100,000 and $300,000 had 3 – 3.5 months of inventory, thus putting us in a very brisk market that is starting to really favor sellers. For properties priced between $300,000 and $500,000 we have 5.5 – 7 months of inventory, thus entering that area typically favoring the buyer. Note that there is not much in between! All that being said, we have a very brisk lower end of the market, a softening middle range and a “cushy” soft upper end (homes priced over $500k) where we have somewhere between 10 and 20 months of inventory. All that being said, overall the market is as solid as we have had since 2008 and we are no doubt going to see the strongest sales figures, across all parameters, we have seen in nearly 10 years! It has been amazing and we should all be very thankful to have 2009-2012 well in the rear view mirror! 2017 has been an incredible year for housing and I fully expect 2018 to continue this trend, albeit maybe with a little more pressure on the gas in the lower end price ranges.
You are most likely correct about the “double edged sword”, because when you sell and buy in the same market everything is relative! This means that if your home has gone up 10%, then so has the home you are likely to replace it with. The exception to this in our market is when you are making a significant move up, let’s say from $350,000 to $550,000. If you are making that kind of move up, sometimes you can make up a little ground as the lower priced home appreciation has outpaced the upper end for quite some time. Low inventory is an issue and the good ones generally sell quickly. If you are pondering a move you need to focus on being flexible, as perfect timing can prove as elusive as a Sasquatch sighting! Be prepared to sell and then rent or have somewhere to burn a little time in between properties if the timing does not work out perfect. You might consider looking at new construction, as this provides you the ability to plan as you attempt to “time” the events of selling and buying!
I find, time and time again, selling and buying are a lot like life! It will be what you make of it! Everything might not work out perfect, but really what does? Jumping a few hurdles is generally a good thing and it makes you appreciate the smooth times even more! Go ahead and jump in feet first, the water is only really cold for the first few seconds!
The Kimbrough Team