Over the past few years, we have been in a strong seller’s market where bidding wars were common and expected. A seller’s market is a market where the inventory of homes for sale cannot satisfy the number of buyers who want to purchase a home.
In some of the areas around us, first-time buyers have been met with stiff competition throughout their experience. Some of these buyers have been out-bid multiple times before finally winning a bid on a home that they liked.
According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), there is currently a 3.7 month supply of houses for sale. With the current number of houses listed for sale and the level of buyer demand, this means it would take 3.7 months for all the houses listed to sell if no additional listings came to market. Any supply number under a 6-month supply is considered a seller’s market. According to NAR, the housing market hasn’t had a 6-month supply of houses for sale since August 2012.
Now, here is the good news for home buyers. A recent report shows that the percentage of houses that sold with a bidding war decreased from 53% in January of 2018 to 13% this year. One reason for the decline is an influx of houses being listed for sale. Even though the month’s supply number is not increasing, the number of houses for sale is. The chart below shows the year-over-year change in inventory over the last 12 months.
As you can see, the number of houses for sale has started to build up over the last eight months. Prior to this reversal, housing inventory levels had fallen for 36 consecutive months when compared to the year before.
Danielle Hale, realtor.com’s Chief Economist, and a frequent guest when I had my radio show, Real Estate Today, recently gave some insight into why bidding wars are less common on a local level this year, “Last year you might have been the only listing in your neighborhood and you could put your house up at a certain list price and you would likely see multiple offers at or above that list price. That tide is turning this year. It’s going to depend on what neighborhood you’re in, but we expect it to be more common this year that you won’t be the only listing.
In the luxury and premium markets, the top 25% of listings in an area by price, inventory is increasing at a greater rate than the starter home market. As the choices buyers have continue to increase, the likelihood of a bidding war will decrease.
So far this year, a couple of my clients have experienced a bidding war despite their competition but it takes a very marketing savvy approach tailored to the house for sale to produce these kinds of results.
Now, if you are debating listing your house for sale this year, you may not want to wait for additional competition as inventory continues to rise. If you would like to talk more about getting your house sold for the highest price possible, feel free to reach out to me.