January ending means we are officially at the beginning of the spring real estate market. We are very ready! Hope you are too. In our last newsletter, we put out a “buy” signal for people that are serious and ready to go. Sellers can get a deal done if they are willing to negotiate. This is still the case. We are watching to see if the inventory starts to increase in a meaningful way. If it does, we could begin to lean into a more balanced market. If inventory remains low, the buyers will retain the leverage. Here’s what to watch for:
Will inventory hit historical norms?
How will this impact leverage?
The two charts below show how many apartments are currently on the market and how many new listings have come to market so far this year. Historically the average number of apartments on the market is over 7,000 at this time of year. We currently have just over 6,000 apartments on the market. Lower than average, yes, but moving above where it was in 2022 and rising. The cumulative new listings that have come on the market this year so far are also noticeably higher than in 2022 but lower than in prior years.
It may not turn out to be the heaviest listing season in recent years, but new listings are expected to continue to trend up.
Pending sales continue to stay fairly flat and just under 2019 numbers. It is possible that as apartment options rise, buyers will push this number up, but it is too early to tell.
The balance between supply and pending sales will determine if the current buyer leverage will continue or if sellers will regain some ground.
Know Your Leverage
What does the Market Pulse in the chart below mean? It compares supply and demand in the market as a whole to come up with a non-subjective number to measure negotiating leverage.
- Lower number means Buyer’s market.
- Higher number means Seller’s market.
Currently the Market Pulse indicates a buyer’s market, but that number has been fairly flat recently. Now if the new inventory doesn’t keep up with demand, we could see leverage shift back towards the sellers as motivated buyers compete more frequently for the best apartments. If more listings come on than expected, it could result in the buyer’s market continuing. Only time will tell where leverage will shift.
As always, please email or call with any questions. Feel free to contact us anytime!