Monday, July 16, 2018 / by Derek Gutting
Is it too late to sell your home??
As a real estate agent for the past 18+ years, I have seen the ups, downs and flat markets and oh boy do I remember the 2007 shift which went from an incredibly hot market to a real estate crash virtually overnight. And when I say overnight, I mean within 2 weeks the market shifted drastically. Most economists are not forecasting another similar crash in the near future; however, a shift is near and maybe closer than most think. The housing market incline is now almost 9 years long, which is the 2nd longest time frame for housing appreciation since 1840. Yes.. since 1840. Gulp! Real estate is cyclical, we do not know how long this appreciation and strong market will last, but we do know from history that it is near the end and it WILL go back down. Housing prices have increased dramatically, while incomes have risen slightly, resulting in low affordability, especially for the millennial buyers, who happen to be the largest buyer pool. You don't have to be an economist to understand that housing prices cannot continue to increase twice as fast as incomes and people still be able to afford to purchase a home.
The most recent stats continue to show a softening in the market. One of the biggest reasons for the dramatic increase in house values over the past few years is due to the massive shortage of inventory of homes for sale. Those numbers are beginning to tip to a more balance market with inventory rising. The nations housing inventory increased 12.2% in the second quarter, which is the biggest gain since early 2015, according to Trulia. Inventory is rising significantly in almost every market around the country.
In Indianapolis, our inventory continues to rise monthly. Our team has tracked the number of active listings in 2018. January there were appx 5100 active homes.. today there are 7140 active homes. While it is still a very low number historically. Even with historically low numbers, we are no longer seeing multiple offers on homes within hours of hitting the market. We believe that many home buyers that were looking in the Spring which may have wrote one, two or three offers on homes but lost out due to the competition, have simply stopped looking and are waiting for the market to cool. It was a very frustrating process for buyers this Spring, but for the most part those days are over. We need to educate Sellers that while the market is still a good sellers market, it is no longer a "put on the market and sell in 24 hours" type market.
We have been watching the numbers closely to see if this was just a typical summer slow down or if is a bigger sign of things to come and that the market is truly softening and becoming more balanced. From looking at the national numbers, it is our opinion that it is more than just a seasonal slow down and that the market has begun its shift. Question is... will this be a shift to a more balanced market or will it be more significant and shift to a buyers market and a significant decline in housing values? Time will tell.