For the past five years, the number of existing homes for sale has lagged below demand, setting the stage for a market that favors sellers. Could the tide finally be turning in favor of buyers? Maybe.
Sales of existing homes dropped by 4.9 percent nationally in March, compared with March 2018, according to the National Association of Realtors, and the number of homes on the market rose by 2.4 percent. Houses took a little longer to sell — an average of six days longer than last March. The slowing housing market could mean that buyers will eventually gain the upper hand and face less competition from other buyers.
A new study by Trulia, an online housing marketplace, found signs that the housing market in 50 metro areas is shifting in favor of buyers, up from five metro areas last spring. Although Trulia isn’t suggesting that these markets have flipped into buyer’s markets, the company’s researchers have found indications that these markets are starting to move in that direction. Homes are taking longer to sell. Sellers are making price cuts before they can sell, and homes are selling below their original list price.
The shift is particularly noticeable in markets where home values have risen the most in recent years, which Trulia researchers say could mean those markets have hit an affordability ceiling. Markets such as Las Vegas, San Jose and Seattle show the most dramatic shift toward buyers, in part because home prices in those areas have increased by more than 50 percent over the past six years. In recognition of the disconnect between what buyers can afford to pay and home prices in those markets, sellers are now making more price cuts and accepting offers below their original price, particularly if their home has lingered on the market.
Trulia researchers found that the Washington area showed a slight overall shift in favor of buyers in March. Nearly 45 percent of Zip codes in the region showed one or more signs of movement in favor of buyers, such as a price drop, a longer time to sell or a final price further below the listing price, up from 14.6 percent of Zip codes last year.
In the District, the market in Foggy Bottom appears to be shifting toward buyers, with the number of days it took to sell a house increasing 27 percent and an increase from 9.4 percent to 13.3 percent of homes with at least one price drop before selling.
Among Zip codes closest to the city center, the market in McLean, Va., appears to be shifting toward buyers, with an increase of 3.9 percent in the number of days it took to sell a house and an increase from 8.6 percent to 15.3 percent of homes with at least one price drop before selling. Similarly, Laurel, Md., saw an increase of 32 percent in the number of days it took to sell a house, but the number of homes with at least one price drop before selling declined slightly from 12.4 percent to 11.6 percent.
For more on the Trulia report, visit trulia.com/research/buyer-seller-shift/