What is the Market?
This blog is not going to be about “fluff” I’m not going to send out recipes for the latest and greatest cookie or the hottest new home decorating ideas … it’s going to be about Real Estate Knowledge. SO here goes.
Knowledge is power. I have always believed that my job as a realtor was to give buyers and sellers the knowledge needed to make educated and informed decisions when purchasing or selling a home.
First, what is meant when a realtor says “the market”? The National Association of Realtors has a slogan that states “each market is different, so check with your local realtor”. When I speak of the market I’m discussing the number of houses listed/sold thru my local multiple listing service (MLS). I’m not overlooking for sale by owners (FSBO’s), but without knowledge of those properties – other than a sign in the yard that says “for sale” – the public, including me, has no information. You don’t even know that it’s for sale unless you happen to drive down the street.
We hear of Buyers and Sellers Markets as well as a normal or balanced market. What does that mean, and how does that affect a consumer? A normal or balanced market is one where the average home inventory is 6 months. Home inventory is how long the average home in an area takes to sell from the day that a sign goes in the yard to the day keys are handed over to a new buyer- sometimes also called days on market. 6 months may seem like a long time to be on the market but it isn’t considering all the steps required to close a house once it goes under contract.
A Buyers’ Market occurs when it takes more than 6 months for an average a home to close and a Sellers’ Market happens when it takes less than 6 months. Now I can only really talk about the market that I’m located in – that’s the Kansas City Metro Area. The metro area is defined by the US Office of Management & Budget, and actually encompasses a fifteen-county area anchored by Kansas City, Missouri, and crosses the states of Missouri and Kansas. My MLS covers 5 counties with some overlapping of 3 other counties. I will only discuss my local MLS coverage.
Currently (for the month of March) the average median Price in Kansas City was $ 175,375, with an average Day on Market (DOM) of 98. Year after Year the inventory of homes has been pretty much static with a total of 11,932 houses on the market – last year that number was 11,889. However inventory was up 9% from February to March 2014, so at the moment the Kansas City Area is currently experiencing a “Seller’s Market” – in that there are buyers who want to buy and a limited number of houses available. Boiled down this means that we are seeing an increase in multiple offers on properties and sellers that are less likely to give price or concessions. In a Buyers’ Market the opposite happens, there are a lot of homes on the market with just a few buyers who are looking and/or qualified to purchase. When that happens, prices of homes may drop and sellers find themselves in the position of giving concessions to buyer’s in order to secure offer’s and more importantly keep contracts on tract to a successful closing.
If you want to follow the Market Statistics for the Metro MLS, I’ll be posting them monthly under the Market Pulse Tab.