Why the winds may soon shift from a seller's to a buyer's market
If you've tried to unload a home for sale over the past couple years, chances are you got near top dollar for your property. But the times they are a changin', say the experts - and homebuyers who've been braving the gusts of a strong seller's market may soon have the wind at their backs.
Forty-three percent of the experts polled in the latest Zillow Home Price Expectations Survey say they anticipate the housing market to switch from one that favors sellers to one that favors buyers as early as next year.
"Current conditions in the U.S. housing market highly favors sellers over buyers - the selection of homes for sale is incredibly limited, those homes that are available tend to sell very quickly, and home prices are rising rapidly," says Svenja Gudell, Seattle-based Zillow's chief economist.
But that tide should turn over the next couple years, she adds.
"The number of homes for sale will rise as builders construct more homes and as more sellers enter the market looking to capitalize on recent home value gains," Gudell says. "This additional inventory will help to both cool off rapid home value appreciation and keep homes on the market a bit longer, making it easier for would-be buyers to save for a down payment and giving them more time to make a decision on a home that's right for them."
Seth Lejeune, Realtor with Berkshire Hathaway Home Services in Collegeville, Pennsylvania, agrees that there could be a flip in the dynamic of the market a year from now.
"It really depends on whether the economy continues to improve and if something happens to rattle consumers' confidence, such as a terrorist attack or some other jarring event," Lejeune says. "Otherwise, inventory levels should exceed buyer demand eventually and create a nice environment for them."
A buyer-friendlier market is inevitable if home equity positions continue to improve and homebuilders complete more projects, which will result in more housing stock, says Brandon Boudreau, COO for Metro-West Appraisal in Detroit.
"Credit availability will loosen as the lending process should become less regulated under the new presidential administration. Interest rates will continue to climb back toward historical norms, which will still be very attractive," Boudreau predicts. "And as inventories rise, real estate values will stabilize."
Mark Ferguson, author and real estate investor, on the other hand, doesn't believe buyers will have the upper hand for the foreseeable future.
"In 2018 and 2019, we may see a slowdown in prices because affordability will become an issue," says Ferguson, "but I don't see a buyer's market anytime soon."
Whether the market eventually shifts or not, the fact remains that now continues to be a prime time for both sellers and buyers for different reasons: the former can take advantage of higher asking prices and the latter can capitalize on lingering low mortgage interest rates.
"Buyers should focus on getting great deals, and sellers should focus on making their homes sell for the most money," Ferguson says. "But you should never try to time the market - other factors should drive your decision."
Gudell concurs.
"The decision on when to buy or sell is a highly personal one that is almost entirely dependent on personal preferences, family needs and financial considerations - not necessarily a given market's local conditions or its tilt toward buyers or sellers," says Gudell.
To determine the best time to pull the trigger on a purchase or sale, be informed and do your homework, says Lynn Mullen, broker with Denver-headquartered HomeSmart Realty Group of Colorado.
"Whether you are a buyer or seller, find a reputable real estate professional who can guide you through the process armed with all the necessary tools to produce a successful outcome," Mullen says.