How do you know when we’re in a buyer’s market? How do you know when we’re in a seller’s market? The key term to remember in answering these questions is ‘market absorption rate,’ or how long it would take to sell all available homes on the market if none were added.
Suppose you’re in a market where five homes are selling per month. If there are 20 homes on the market, it would take four months to absorb the whole inventory. You may have been taught in real estate school that a balanced market is when there is six months’ worth of inventory. That’s when the playing field between buyers and sellers is more or less level.
I know some of you out there have been struggling to find houses and can testify that we’re definitely not in a buyer’s market, but I want to share a tool with you that you can use to help communicate to your clients how crazy the market is. If you go to dfwmarketreports.com, you’ll be able to see our market reports. As you can see in the video, I’ve pulled one up on the screen for Frisco, Texas. On the right side, the tabs colored red indicate a seller’s market. If you look at any of the price points under $1 million, you’ll generally find less than a month of inventory, which means all of the houses on the market right now will be gone in less than a month. If you’re in the field, you know what I’m talking about.
If you use these market reports to communicate with your clients, it’ll make the over-market offers a little easier to stomach because they’ll know what’s really happening. Ever since COVID hit, it’s only intensified our seller’s market. Do you expect this to change anytime soon? I certainly don’t. Depending on interest rates, we should see a continuation of this strong seller’s market for at least another year.
If you’d like to know where to get your own personalized market reports, reach out to me and I’d be happy to help you. In the meantime, go out and make it a great day!
