Hint: What’s In Between a Buyer’s and Seller’s Market?
Along with most large metro housing markets, the Twin Cities has favored Sellers for so long — about 5 years now — that Buyers and Seller (if not their agents) can be forgiven for forgetting that there are two other kinds of markets.
The first is easy — at least for anyone who’s been in real estate for at least a decade.
Can you say, “Buyer’s Market?”
Which leaves the third kind of market.
It’s known as a “balanced market” — or, in economics lingo, “a market that’s in equilibrium.”
Lies, Damn Lies, and Housing Market Statistics
By convention, Realtors and economists generally consider a housing market with 4-6 months’ supply — known as the “absorption rate” — to be in balance.
By contrast, the Twin Cities housing market is still a drum-tight 2.5 months.
However, the vibe amongst active agents right now (including yours truly) is that that number feels poised to shift.
If you want a weather forecast-like label, call it “a still strong (but softening) Seller’s Market.”
P.S.: At least as far as I can tell, while all markets — housing and otherwise — gravitate towards equilibrium, there’s no imperative that they linger there.
Translation: they often overshoot.
In fact, according to David Arbit, MAAR Research and Economics Director, the Twin Cities housing market has technically been balanced less than 5% of the last decade.
The rest of that time, it was either a Buyer’s (2008 – 2013) or Seller’s market (2013 – current), with only brief transitions at “Equilibrium” in between.