Why It’s Still a Seller’s Market

As there’s more and more talk about the real estate market cooling off from the peak frenzy it saw during the pandemic, you may be questioning what that means for your plans to sell your house. If you’re thinking of making a move, you should know the market is still anything but normal.

As you can see below we’ve had another significant increase in the number of homes for sale. But that’s not because we’re getting all these new listings. It’s because the existing inventory is staying on the market longer because the prices start out too high for the new market we’re in.

Even though the supply of homes for sale has been growing this year, there’s still a shortage of homes on the market. And that means conditions continue to favor sellers today. That’s because the level of inventory of homes for sale can help determine if buyers or sellers are in the driver’s seat. Think of it like this:

A buyers’ market is when there are more homes for sale than buyers looking to buy. When that happens, buyers have the negotiation power because sellers are more willing to compromise so they can sell their house.

In a sellers’ market, it’s just the opposite. There are too few homes available for the number of buyers in the market and that gives the seller all the leverage. In that situation, buyers will do what they can to compete for the limited number of homes for sale.

A neutral market is when supply is balanced and there are enough homes to meet buyer demand at the current sales pace. And for the past two years, we’ve been in a red-hot sellers’ market because inventory has been near record lows. The blue section of this graph highlights just how far below a neutral market inventory still is today.

I mentioned in the past that in January of 2008 we peaked at a 8 month supply of homes for sale here in the Triangle and didn’t see prices go down until April 2008. This is nothing like that.