What is a Seller’s Market and What Does That Mean For ME?

Written by Debbie Bullard

There’s a buzz around Charlotte that it is a seller’s market.

What does that mean?

It means that there are more buyers than homes for sale. Since supply is less than demand, homes will be higher priced and more attractive to the sellers in the market. In contrast, a buyer’s market is one in which there are lots of sellers and relatively few buyers, which leads to lower prices.  To get an idea of the overall housing market in the Charlotte metro area…

The Charlotte Regional Realtor Association recently reported that  3,254 residential properties were sold last month, compared to 3,301 homes in March 2015.Inventory fell 27.8% during that same time span, leaving the region with just a 2.8-month supply of homes for sale, according to the association’s monthly sales activity report.

So, overall, we are in a strong seller’s market. 2.8 month supply of inventory means that if we did not get any new inventory in 2.8 months, there would be zero inventory.  A housing inventory of six months is typically considered a balanced market between buyers and sellers. When the number drops below the six-month mark, the market shifts in favor of sellers.

The list below offers a bigger picture on local home sales activity during the past year. The year-over-year changes show the downward trend in Charlotte-area home sales. I know, this information is dry. But we watch these numbers all the time to help our buyers and sellers…

• March 2016: down 1.4% from a year earlier
• February 2016: up 1.4%
• January: down 10.6%
• December: down 2.6%
• November: down 3.3%
• October: down 3.9%
• September: up 6.1%
• August: up 6.4%
• July: up 16.9%
• June: up 22.1%
• May: up 20.4%
• April: up 14%

March 2015: up 20.3%

For Week Ending Apr. 2

(Data current as of Apr. 11)

The forecast is bright with a persistent rise in pending home sales. Low mortgage rates and rising rental prices continue to point buyers into the housing market. In order to maintain home-purchase momentum, the supply of homes for sale must grow.

In the Charlotte region, for the week ending April 2:

• New Listings decreased 5.0% to 1,255
• Pending Sales increased 1.1% to 1,070
• Inventory decreased 25.7% to 10,517

For the month of March:

• Median Sales Price increased 3.1% to $197,000
• List to Close decreased 6.2% to 121
• Percent of Original List Price Received increased 0.8% to 95.4%
• Months Supply of Homes for Sale decreased 34.3% to 2.9

Is this a good time to sell?

Charlotte covers a huge area covering many different areas/neighborhoods and price points. Some neighborhoods are in a strong seller’s market and have very low supply and high demand, driving the home prices higher. For those on the fence in in that scenario, it is a GREAT time to sell. There are scenarios where there is high inventory and lower demand which drives the prices down which translates into a less than ideal time to sell for those in this camp (and have a choice). There is a formula that we REALTORS® use to help potential sellers decide if this is a good time for them to sell. This formula also helps with pricing strategy for those who need to sell. It is called an absorption rate.

A market’s absorption rate is the best way to figure out whether a certain area is behaving as a seller or buyer’s market. The absorption rate is calculated by looking at how many homes sold in a certain month and divide it by the total number of homes for sale at the end of the month. An absorption rate of 20% or above is usually deemed a seller’s market since homes are selling relatively quickly and the number of months of supply is low.

How we can help

We would love to meet with you to help you decide if it’s a good time for you to sell. We will sit down with you and find out your needs and goals and will give you an honest assessment/consultation of what is best for you.  As part of our consultation, we will do an absorption rate for you, looking at the overall market and narrowing down to your neighborhood. Let’s meet!