How’s the market doing?
“How’s the market doing?” and its close cousin, “What do you think the market is going to do?” are questions we are regularly asked – by clients as they plan their next real estate move, and by friends and acquaintances at social gatherings, waiting in line at the grocery store, or in the stands at children’s’ sporting events. Many of us own real estate, and for the vast majority of us, our homes are our largest financial asset so we are naturally interested in the ebbs and flows of the market.
The first question would, at first glance, seem to be the easier one to answer and in some ways it is. We spend all day paying attention to the local real estate market – what homes are new on the market, which have gone under contract, how much did they actually sell for, which listings expire without selling, etc. We regularly perform in-depth market analyses for potential clients as well as regular market updates for current listings. So we have a pretty strong sense of the statistics – we can tell you the median sales price, or the average days on market, or the number of months it would take to deplete the current listing inventory. But what people really want to know when they ask about the market is “How much would my house sell for today?” and “How quickly would it sell?” and those questions are trickier to answer.
Because the answers depend on many variables. What price range is the house in? Some price bands are definitely more active than others right now. What’s the home’s condition and age? We’ve seen older homes that need updating stay on the market a lot longer than their newer/better condition counterparts even when the price is reflective of condition. What is the location of the home? We’ve noticed buyers are reluctant to commit to homes on more traveled street. Does the house meet a current demand? For example, ranch homes in good condition have been selling like hot cakes as there aren’t that many options for single floor living.
The second question really requires a crystal ball because so much can impact the future real estate market. Where are mortgage rates headed? What’s the economic outlook for jobs? How high is consumer confidence? All these external factors can, and do, impact home buying and selling behavior. Realtors are optimists by nature, and we generally have reason to be. And who wants to hire an agent to sell their house who is all doom and gloom about market conditions? Real estate is a good investment which, over the long term, appreciates. The American Dream of owning a home is alive and well and there’s no reason to believe it’s going to change. Even millennials who have been slow to enter the real estate market still overwhelming report their desire to buy a home, when surveyed about their aspirations. Here in the Capital Region we tend to be sheltered from the more dramatic ups and downs of the real estate market. Ours highs are never quite as dramatic, but on the flip side, neither are the lows. So what’s not to be optimistic about? But optimism doesn’t mean that some properties will be harder to sell than others or that a home up the street won’t command a higher price than yours.
We do like talking about real estate and are always happy to answer questions about the current and future market so the next time our paths cross, please feel free to ask us our opinion on how the market is doing. We’ll do our best to answer your questions.