Ask Homes.com to Show You How Local Home Values Are Changing
Change is in the air. Housing markets seem to be losing steam. In the final months of 2018, sales were trailing the previous year and supplies of homes for sale were increasing in many markets.
Leading housing economists are predicting that by 2020, most housing markets will favor buyers rather than sellers. In 2019, the switchover from sellers’ markets to buyers’ markets will be well underway in many of the nation’s housing markets.
In sellers’ markets, supplies of homes for sale is small, prices appreciate quickly, homes sell fast, multi-bid competitions are frequent, and sellers are less willing to negotiate. Buyers’ markets are the opposite — inventories are larger, prices rise slowly or fall, properties take longer to sell, and sellers are more accommodating.
Driving the change is a growing number of homes for sale. Buyers will have more homes to choose from and less competition when they are ready to make an offer. The drought of homes for sale over the past four years has driven up prices. More homes on the market will relieve pressure on prices, and price appreciation is expected to slow down significantly in 2019. Prices are expected to continue to rise, but at a slower rate.
These changes do not happen at the same time everywhere. Inventories change at different rates that reflect different local conditions. Supplies also differ based on price. A market with a plentiful supply of luxury-priced homes might have a deficit in affordably priced starter homes.
In the past year, inventories have been growing, and the rates that prices have been increasing by are shrinking fastest in some of the West Coast markets where they rose the most. Those markets reached a turning point where supplies of home for sale stabilized and even increased over the last half of 2018. Just as shortages of homes for sale have been driving prices up, replenishing inventories are slowing appreciation. Prices in these markets reached a point where they became unaffordable to first-time buyers and encouraged owners to sell. Markets that led the price recovery that became the third largest real estate boom ever recorded are now leading a correction that could put buyers in a better bargaining position in 2019 at the expense of sellers.
How to Use Homes.com to Find Buyers’ Markets
Understanding how the changeover from a sellers’ to a buyers’ market affects individual buyers requires access to data at the most local level possible. Even though real estate sales are the most local of transactions, getting current data on national or state-level levels is much easier for consumers than tracking prices and inventories at hyper-local levels that are most important to them. Most major metros are simply too large to be very useful because they mask the hyper-local trends that have the greatest impact on individual properties.
Homes.com’s state-of-the-art website is a powerful tool designed to help buyers and sellers get the information they need. It is entirely local. You can reach the smallest local market listings with just one or two clicks. With a little effort, you can also use Homes.com to identify, track, and forecast the local trends that shape local real estate markets.
You can find current list prices and sales by clicking on the House Values at the top right-hand area of Homes.com’s home page. Scroll down, select a state and click on it. Scroll down on the next screen until you come to a list of local communities with their zip codes. Select a community that you are interested in and click on it. The site will display a screen with current median prices, which are updated every 30 days. In the small type beneath the median price for the zip code, you will find an estimate of the number of homes for sale in that community.
As you search for homes, you can use Homes.com to get a good idea of the value of the home on a hyper-local level by returning to the last screen, the one with a median price for a zip code. Click on the zip code, and you will see a long list of local addresses within that zip code. Most of these homes will not be for sale, but each will have an estimated value. Check on the values for houses close to the one in which you are interested. Look for homes with the same number of bedrooms and square footage. If you come upon any listings, scroll down to the bottom of the listing to find the sales history for the home.
Keep a log of prices, addresses, and dates. Check up on them at least once a month. In just a few months, you will be able to identify price trends in very small areas. Be sure to stay current on local sales. You will see local sales listed on the screens that feature median values for states and local communities. Check out any of these close to your targeted area on a regular basis.
Should the trends you identify impact prices as expected, you can track trends in your community and compare inventories, prices and time on market on a monthly basis. This data will help you understand how trends in your community compare to state-wide and national trends.
Ask your real estate agent to provide you with additional data from the local multiple listing services or a data analytics firm to which they subscribe. At a zip code level or smaller, ask for prices, inventories and the number of days a home spent on the market before the seller accepted a contract on it. Use this information to verify and fill in the gaps.
Your price and inventory trends will become an invaluable guide as you zero in on a home to buy. Sometimes unforeseen events can slow the pace of change or halt change altogether, making forecasting difficult. These include an economic recession, a natural catastrophe or a boom that affects local real estate markets. If you have past information on local prices you can estimate the impact of the catastrophe by comparing pre- and post- prices. It won’t take you long to put together a post-crisis picture of good investment opportunities.