The U.S. housing market crawled out of the recession and has been climbing ever since. Sale prices continue to grow, and buyers who have been squeezed out of the market wait patiently in the wings for the tight inventory to relax.
Now, as the year winds down and sales are slowing leading up to the holidays, prospective buyers are wondering: Is the seller’s market finally over?
A little yes, a little no.
National data suggests 2017’s real estate market will be similar to 2016, with tight inventory and a growing pool of first-time homebuyers. In September, Realtor.com surveyed prospective buyers who visited its website and found that 52 percent of active home shoppers identify as first-time homebuyers, up from just 33 percent in September 2015.
“We’re poised to see a much larger number of first-time buyers this year, but that will of course bring challenges to the market and challenges to those buyers,” says Jonathan Smoke, chief economist for Realtor.com.
A stronger job market and low interest rates are encouraging first-time buyers – many of whom range in age from 25 to 34, according to the Realtor.com survey – to move forward with a purchase. Smoke notes these buyers will continue to face financing issues common among first-time homebuyers and competition for homes on the market.
“We’re not seeing any substantial change in trends that would make it so we’re suddenly going to have six months or more of supply [of available housing]. If you look, we’ve had 49 straight months of below-six months’ supply,” Smoke says.
The seller’s market will likely continue nationally, but in some regions of the country and at certain price points, there are signs of shifting.
Where Are We Seeing the Market Change?
Chad Taylor, a Realtor for Keller Williams Realty Key Partners in the Kansas City, Missouri, metro area, began seeing the market loosen in the second half of this year, partly because buyers are less willing to accept high prices than they have been in the past couple years.
“July of this year is the first time we’ve started to hear buyers say, ‘I’m not paying that price for that house,’ or ‘I’m sick and tired of these bidding war situations,’” Taylor says.
Since then, Taylor notes there has been more housing inventory on the market throughout the Kansas City area. As a result, asking prices are becoming more favorable to buyers, and sellers are offering more concessions in negotiations.
He attributes that partly to some sellers who put their homes on the market yet aren't serious about selling – they want to test the waters and see how much their home can fetch. “They’re diluting the market because they’re creating this glut of inventory,” he says.
This shift is more likely to occur in cities experiencing lower population growth than other parts of the country. Sellers will continue to have the upper hand in metro areas experiencing population booms and waves of new buyers.
Where Are Seller's Markets Likely to Continue?
Consider cities like Seattle, where the population continues to grow steadily – by nearly 4 percent between 2010 and 2014, according to the U.S. Census Bureau – and housing can’t keep up.
The Northwest Multiple Listing Service, the Seattle area’s MLS for properties on the market, reports that active listings in October dropped by more than 13 percent compared to October 2015. Despite more people moving to the area, fewer homes are available for purchase.
Marlow Harris, a real estate broker for Windermere Real Estate in Seattle and creator of SeattleDreamHomes.com, says there isn’t enough development to ease pressure on the market and “the average person just can’t afford it anymore.”
The tech and manufacturing hub has major employers such as Amazon, Microsoft and Boeing that continue to attract job seekers. Compare Seattle to a market like Silicon Valley, which has a median home price of $777,600 – more than double Seattle’s median of $362,468, according to real estate information company Zillow – and Harris says there’s still room for prices to increase.
“In Seattle, I think our quality and standard of living is just as high or better than Silicon Valley, so what’s going to stop our prices from reaching those levels? Probably nothing,” Harris says.
How Can You Still Buy?
If you qualify for mortgage financing (or have the cash to go all in), you should still be able to purchase a home in your market even if it remains a seller’s market through part or all of 2017. It just takes a little strategy.
More than half of home shoppers surveyed by Realtor.com reported they were planning to purchase in about seven months, which means house hunting this spring and summer – the most popular time of the year to buy a home.
But if you want to avoid competing offers and have your pick of homes on the market, Smoke recommends buying now or waiting a full year until the market thins out again next fall.
“Given the low-inventory conditions – and that’s not expected to change dramatically next year – it’s actually in [buyers’] best interest, if they’re in a position [to buy], to purchase in the fall and winter,” Smoke says.
[See: The Best Apps for House Hunting.]
If moving up your purchase date isn’t an option, keep in mind that the real estate market operates in a cycle. We’re seeing the market begin to balance out in places like Kansas City, and it’s only a matter of time before buyers once again have the upper hand.
“Balanced market don’t really exist for a long period of time – they’re really only transitional,” Taylor says. “It could be six months or a year, but then [Kansas City will] head into a buyer’s market.”
She has appeared in media interviews across the U.S. including National Public Radio, WTOP (Washington, D.C.) and KOH (Reno, Nevada) and various print publications, as well as having served on panels discussing real estate development, city planning policy and homebuilding.
Previously, she served as a researcher of commercial real estate transactions and information, and is currently a member of the National Association of Real Estate Editors. Thorsby studied Political Science at the University of Michigan, where she also served as a news reporter and editor for the student newspaper The Michigan Daily. Follow her on Twitter or write to her at email@example.com.