What are the early signs of a seller's market?
Category Newsletter: Article
If you're considering putting your home on the market, the ideal time would be during a seller's market. Seller's markets enable homeowners to demand better prices for their homes and give them greater control over which offers to choose. The result? Walking away with your asking price (and possibly more) is almost all but a guarantee.
But to achieve this, you want to catch a market on its way to its peak rather than waiting for it to reach its peak, which is often succeeded by a cooling of the market.
What signifies a seller's market? Here are the signs:
Less Inventory
The first sign that a seller's market is on the horizon is a decrease in inventory. Typically inventory will begin decreasing as more and more buyers enter the market - demand vs supply.
There's no need to wait for quarterly data to determine if inventory is decreasing; you can rely on readily available data - using property websites to see if property inventory is increasing or decreasing every week.
The Rental Market is Depressed
Often in a seller's market, potential tenants will choose to purchase a property instead of renting one, provided that affordability is not an issue and their credit rating is sound.
Price Increases
Often real estate agents are the first to become aware of market changes and will inform their clients accordingly. Homeowners may also increase prices in response to greater interest and demand for their properties.
Economic Indicators are Trending Positive
When economic milestones begin to outperform forecasts, that's usually one of the signs that the real estate market is on the cusp of a seller's market.
Developers are Investing in the Region
Developers have entire teams assessing data and market trends, which is why when they start investing, it's a sign that the local market is experiencing a revival.
As soon as you see boards for new developments popping up, don't groan; consider it a sign that your suburb is about to become a commodity - and it could be the perfect time to sell.
Fewer Days on the Market
When property listing days on the market begin to decrease, you're likely entering a seller's market. Buyers are eager to purchase properties before prices increase and more offers are placed on the home. Sellers can also test whether the real estate market is experiencing a revival by assessing the number of days properties are on the market before a viable offer is received.
Typically, it can take less than a few weeks in a seller's market for a home priced correctly to receive its first offer.
Currency Fluctuations
A weaker Rand isn't all doom and gloom in areas like the Atlantic Seaboard in Cape Town. Instead, the currency fluctuations can mean more interest from international buyers, given that their currency is stronger and they can get more bang for their buck.
Local buyers with greater buying power may also flood the local markets in sought-after areas rather than pursue international purchases, given they have to fork out more.
Interest Rates
When interest rates stabilise or decrease, buyers feel more confident about their chances of acquiring finance and affording their mortgage payments.
Banks are also more likely to loosen their lending criteria, allowing buyers to purchase properties they wouldn't be able to afford during an interest rate hiking cycle.
Increase in Semigration
Semigration is currently an integral part of the property market in South Africa, as it provides pockets of increased buying activity within an overall sluggish market.
Buyers can assess whether their suburb is moving toward a seller's market by assessing how many "new faces" are in the area or how many out-of-province buyers are putting feelers out regarding relocation.
Conclusion
There are many early signals that a property market is entering a seller's market. Watching for these signals can be a full-time job, which is why you should rely on an experienced real estate agent to gauge whether or not it's a good time to sell.
Author: Coastal Property Group
