What Happens When The Market Shifts?

If you have been in the real estate market, you know that changes can happen rather suddenly.  The real estate market can be much like the stock market, but the real estate market does not usually see the wide changes that the stock market does.  How do you keep up with the shifts in the market?  Who usually is aware of the changes first?  What happens when the market shifts?

Early Indicators of a Market Shift

An image of a front porch, What happens when the market shifts?

The answers to these questions are good things to know if you are in the market to buy or sell.  Let’s examine these questions and their answers. The best way to keep up with the real estate market and what is happening is to stay in touch with an agent that is active in the market that you are interested in.  The agent is usually the first to notice changes.  They notice that the homes that they have for sale are staying on the market longer perhaps or they are quickly going under contract.

Timing Is Everything

When looking at a real estate market it is important to not just look at homes for sale. It is vital to be aware of what the market looks like. To do so involves understanding what happens when contracts are written.  Are there competing offers?  If so how many.  How much over asking price is the winning offer? How quickly is all of this happening?  Is this consistently happening or just in certain price points in the market? Or is this happening only in certain locations?

What Happens When the Market Shifts: Sellers

When the market shifts, active real estate agents are typically the first to notice the change, followed by buyers that are trying to buy in the market.  The last person to usually figure out that a change or shift has occurred is the seller. A seller was typically informed by their agent when the house was listed for sale what they might expect in the market. If the market shifts they may not be told or be kept up to date on what is happening.  They may notice that their house is not selling and not know for sure why that is.

Causes of A Market Shift

What causes shifts in a market?  There are usually only a handful of things that can cause a shift.  One is a change in demand.  The real estate market is ruled by the supply and demand.  If there is high demand and low supply that can cause a shift and if the reverse is happening that can also cause a change in the market.

What Happens When the Market Shifts: Interest Rates

A image of a home, What happens when the market shifts?

Another thing that can happen is a change in interest rates. That can affect affordability and cause a shift.  Buyers that were able to buy when interest rates were at 4% may find themselves priced out of the market when interest rates are at 5.5%.  Another thing that can cause a shift is the upward price of homes can affect affordability and when prices reach a certain point some buyers will no longer be able to afford a home and they will stop looking for a home.  The demand will go down and this can affect the market and cause a shift. You can view historical interest rates here.

Knowing what to expect when you are in the market to buy are sell is very important. If you would like an update on what is currently happening in the market, contact me today.