Throughout the last two years, the housing market has seen many fluctuations, which may leave existing and prospective homeowners wondering whether it is a good time to buy or sell a home.
Experts Joel Gabelman, a Realtor at Gabelman Group in Bainbridge Township, and Jenn Wrubel, a Realtor at Re/Max Haven Realty in Solon, discussed the housing market and the pros and cons of buying and selling right now.
In order to determine whether it is a buyer’s market or a seller’s market, Realtors take all active homes on market in an area and divide that by the amount of homes sold in a time period, Gabelman said. If the result is below six, it is a seller’s market. If it is above six, it is a buyer’s market.
“Let’s say that there are 60 active homes and 10 homes sold last month,” he said. “If you assume that there are no more homes coming online – no new, active homes – you will sell through all available homes in six months.”
That is considered a neutral market, Gabelman said. It favors neither buyer nor seller.
With greater inventory, and if there are more homes than there are buyers, a person can get better deals, he said.
With low inventory, the cost to build is higher, he said.
Because the COVID-19 pandemic impacted the supply chain due to the lack of international shipping of goods, the prices of materials increased, which resulted in a heightened cost to build, Gabelman said.
“With low inventory, (and) a high cost to build, homes were sometimes selling in a day – $30,000 $40,000, $50,000 over ask, waiving inspections,” he said. “It was crazy. It was such a seller’s market. You could (put a home up for sale) and you’d have 10 people in the first day on market.”
A few months ago, Gabelman saw a shift, he said. Interest rates have gone up and buyers have grown tired of having to come out of pocket so much, waive inspections or whatever else they’re aggressively doing to get a home.
“Currently, we are (seeing) a sizable imbalance between housing supply and demand,” Wrubel said. “While the delta is still large, it had been enormous just a few months ago.”
Another factor is financing as interest rates impact the amount of a loan a client can afford, she said.
“As interest rates rise, pre-approved mortgage amounts decrease,” Wrubel said.
While interest rates are coming up from “unbelievable” lows, they are still quite low in comparison to historical rates over the last 30 years, she said.
Whether it is a buyer’s market or a seller’s market also depends on the needs of the client, Wrubel said. Some buyers have no choice, some are looking to upsize or downsize and some are looking for a change.
When searching for a Realtor to assist in buying a home, Wrubel recommended finding one who has knowledge of the area, proven performance and will think outside the box to make a buyer’s offer stand out in ways they are comfortable with.
“Open and honest dialogue is imperative,” she said. “Personalities have to fit together as well.”