5 Signs the Real Estate Market Has Shifted

Many in North America have been anticipating an incoming housing “bubble” crash. While it’s not as clear whether we are there, or on the way there, it is evident that the real estate market has started to shift. That’s why it is important to identify when a market is in transition so that buyers and sellers can plan accordingly. Below are 5 signs the real estate market has shifted.

Decrease In Bidding Wars

This is probably the first sign and one of the most important signs of a shift. With the drop in demand, the supply will start to increase. This results in less offers, or no offers at all being submitted as buyers now have more options to choose from. If the trend continues, price adjustments are most likely to follow (depending on the home itself and the community pocket you are in).

Expired/Terminated Listings

An increase in expired listings is a HUGE sign that we are in a market shift from a seller’s market to a buyer’s market. During a seller’s market, most homes will be sold before the expiry of the listing contract. The opposite happens during a buyer’s market as buyers have the opportunity to take their time and be more selective before putting in an offer.

Absorption Rate

The absorption rate is the rate used to measure how fast homes are being sold over a specific period of time. The absorption rate is basically the number of months that it takes for the current inventory on the market to sell. When homes take longer to sell, this is another market shift indicator. This change can happen very quickly and surprise sellers. It is always good for you and your listing agent to keep up to date with the market.

Economy

Real estate markets can often be tied to the economy as a whole. Changes in investments like stocks and bonds can provide insight to the direction of the economy, and in turn, the direction of the real estate market. The more stable the economy is, the stronger the real estate market. Of course in more turbulent times, real estate can be affected.

Interest Rates

When the government increases interest rates, both the economy and the market can begin to stall. As borrowing costs become more expensive, the buying motivation begins to disappear. So while housing prices may drop, the ability of buyers to secure financing drops with it. So don’t be fooled by dropping prices, there is an underlying consideration. As central banks continue to raise rates, lending institutions increase their mortgage rates which in turn makes it more expensive. This is as clear an indicator of a market shift as there is.

Final Thoughts

Stay away from media headlines that spark fear. Speak with your real estate advisor about the current market shift and how you as a seller or buyer can navigate through it. There are always opportunities out there that you can take advantage of. Yes, prices have started to adjust and yes properties are taking longer to sell. Do your research, stay educated consider your options. Use the 5 signs the real estate market has shifted.

Feature image credit Tierra Mallorca