Where To Buy To Avoid A Sellers Market

Dated: 03/15/2017

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Nationwide the inventory of existing homes for sale in today’s market is at a 3.6-month supply according to the National Association of Realtors latest Existing Home Sales Report, however in San Diego County we're at a 1.3-1.6-month supply according to the most recent Market Watch report by HomeDex. Local inventory is down over 30% from last year. 

Historically, inventory must be at a 6-month supply for a normal market or balanced market where home prices appreciate with inflation. Anything less than a 6-month supply is a sellers’ market, where the demand for houses outpaces supply and prices go up. 

As you can see from the chart below, the United States has been in a sellers’ market since August 2012, but last month’s numbers reached a new low.

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There's more to the story though, because although a 1.6 month supply would indicated a strong Seller's Market, it's not true in all market segments. Recently Trulia reported that not only is there a shortage of homes on the market in general, but the homes that are available for sale aren't meeting the needs of those looking to buy.

Homes are generally grouped into three catagories by price range: starter, trade-up, and premium.

Trulia’s market mismatch score measures the search interest of buyers against the category of homes that are available on the market. So “if 60% of buyers are searching for starter homes but only 40% of listings are starter homes, [the] market mismatch score for starter homes would be 20.”

Here's a snapshot of what the national inventory mismatch looks like: 

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Nationally, buyers are searching for starter and trade-up homes and are coming up short with the listings available, leading to a highly competitive seller’s market in these categories. Premium homebuyers are looking a Buyer's market in their home segment, and are more likely to find a home that suites their needs in their price range. Although the numbers are a little different, the model holds for San Diego County - Starter and Trade-Up homebuyers are facing a strong Seller's market, while Premium homebuyers are looking at a market that is more likely to favor their needs. 

Lawrence Yun, NAR’s Chief Economist doesn’t see an end to this coming any time soon:

“Competition is likely to heat up even more heading into the spring for house hunters looking for homes in the lower- and mid-market price range.”

Bottom Line

If you're doing a Trade-Up move we can help you navigate the market so that you only have to move one time, get top dollar for your current house, and get a great deal on your new home! Call me! (760) 936-8576

Christy Lundy
Re/Max Home Center
CA BRE #10961048
(760) 936-8576

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Christy Lundy BRE#01961048

Christy became a Realtor after a 15 year career with a national non-profit, where she focused on helping people improve their lives. She brings that focus, drive, and concern for her client's needs to....

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