From a Seller’s to a Buyer’s Market?

The catalyst(s) and pace may vary, but the dynamics of a housing market shift — most recently from a Seller’s market to a (nascent) Buyer’s market — are unvarying.

And that’s regardless of locale or calendar (i.e., it describes Las Vegas 2007 as well as Orange County in the early 1990’s).

Here’s how the process unfolds:

One. Rising prices tempt more home owners to put their houses on the market.

Two. At least some of those would-be Sellers overestimate (robust) Buyer demand, and set unrealistically high asking prices.  As a result . . . .

Three. Overpriced homes accumulate on the market, and combine with new listings to swell inventory.

Four. Housing supply shifts from limited to abundant supply.

Five. Home Sellers reduce prices to compete for Buyers.

Supply & Demand

Where in the process are we now?

supply demandAt least in the Twin Cities housing market, I’d say somewhere between steps #3 and #4.

Where things go from here depends — as always — on such variables as interest rates, employment, and the health of the overall economy.

P.S.:  Some housing market analysts would add “consumer confidence” to the foregoing list.

My view, however, is that consumer confidence is a derivative — and lagging — economic signal.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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