All Real Estate is Local
Updated: Dec 16, 2022
We all love to check home prices on Zillow, so the media loves to give us click bait headlines about what is happening in the real estate market. But most of those headlines are describing NATIONAL trends, not local conditions. Do you really care what is happening in Boise, which is mentioned a lot because it had a huge price run up and is now seeing price drops.
A lot of that national noise is reporting on aggregate metrics for the housing market as a whole, and I find those metrics to be alarmist and even misleading. If you're thinking about buying a home, do you care about national home price appreciation trends, or are you more concerned with finding a house that makes sense for your needs? And if you're selling your house, all you need is one buyer who is willing to pay you a fair price.
The metric that I follow most carefully is months supply of inventory. That may sound more complicated than it is - we take the number of houses on the market at any moment in time and divide it by the number of houses sold in the last month. So if there are 120 houses currently for sale and last month 40 sold, you have 3 months supply of active listings.
In our local market (I use Sudbury, Wayland and Concord as my proxy for "local") we have about 2 months supply currently, up from about 1/2 months supply earlier this year. Buyers therefore hav more opportunity with the increase in supply of houses, but 2 months supply is still a sellers market. That means that properly priced houses are likely to sell, because there are still enough buyers out there. Interestingly, about half the houses sold locally in the last month sold ABOVE the asking price, a surprising stat if you only look at the headlines!
In the last month, I've helped two families buy homes, and in each instance there were multiple offers. Well cared for, properly priced houses are still selling!
So where is month's supply of inventory heading? Recently, it's been rising a bit, locally and nationally, meaning that houses are expected to take a little longer to sell than earlier this year. But 2 months supply is still a seller's market, just not the crazy market we had in 2021. It's impossible to predict where this is heading because so much depends on the economy, interest rates, number of new homes being built and lots more.
So the next time you see click bait headlines about the aggregate number of homes being sold, think to yourself - "I wonder how many months of inventory are available?"