Important Facts, Terms, and Trends You Must Understand to Interpret the Market

Do you know how to interpret market conditions? Today, we will teach you how to do so by illuminating some basic, yet important, facts and terms.

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The most common question people ask Realtors is, “How’s the market?” The answer to this question, however, is more complex than many might think. 

There are a few basic facts buyers, sellers, homeowners, and investors must understand in order to properly interpret the market. Here are six of the most significant: 

1. The market is dependent on supply and demand. 
2. The speed of the market impacts (and is impacted by) other real estate conditions. 
3. The market relies on the cost of borrowing money (i.e. interest rates). 
4. The market relies on the ease with which lenders are willing to loan out money. 
5. The market is influenced by a number of specific positive and negative forces. 
6. The market relies on location, location, location. 

With these points in mind, those seeking to interpret the market will also need to grasp certain industry-specific terms and phrases. Allow us to define a few of the most critical: 

Seller’s market: A market in which demand is greater than supply, giving sellers the advantage.

Buyer’s market: A market in which supply is greater than demand, giving buyers the advantage. 

Balanced market: A market in which supply and demand are relatively equal, meaning neither buyers nor sellers have a distinct advantage. 

While each of these terms gives us a general idea of who might benefit from a given type of market, there are also specific scenarios which give buyers and sellers even greater power.

A seller who is downsizing while in a seller’s market, for example, will enjoy great gains from listing their more expensive property before going on to purchase a more modest one. 

Sellers who wish to move up, on the other hand, will be better off doing so during a buyer’s market. First-time buyers, as well as investors, will also be at a strong advantage during a buyer’s market. 

Each market is named according to which group of people will most benefit from it’s conditions. Ironically, buyers’ motivations tend to run conversely to market trends. This happens because it is during seller’s markets, not buyer’s markets, when the media begins to up-play the appeal of making a home purchase.

Real estate conditions are perpetually shifting, so knowing how to interpret the market will be essential to your success whatever your goals may be.

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Ultimately, buyers define the market regardless of whether they currently are in an advantageous position. 

The real estate market changes often. Sometimes these changes are dramatic, and sometimes they are subtle. In either case, real estate conditions are perpetually shifting, so knowing how to interpret the market will be essential to your success whatever your goals may be. 

If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from us soon.

The 5 Benefits of Selling Your Home in the Fall

Today I am sharing five reasons that the fall is a great time to sell your home.

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What are the benefits of selling in the fall? Today I am going to share five of these with you.

1. Buyers are often more serious in the fall. During the spring and summer, many buyers are more curious than committed. Fall buyers, meanwhile, are more serious and can suffer from having too many homes to choose from which makes them feel like they can be pickier and extend their search. This is because many have been searching throughout the summer and still have yet to find the perfect home. Fall buyers are forced to look for a home because of a new job, relocation, or because they need to before the holidays.

2. There is less competition. It is no secret that there are more homes listed in the spring and summer and that more buyers are looking at that time as well. However, with the larger number of homes to compete with, sellers in the spring and summer do not have a clear advantage. Also, the homes that are not sold by the end of the summer are often delisted by the unrealistic sellers who wanted to test the market. This is why, if you list in the fall, you can have the benefit of standing out as well as facing less competition than during the “hotter seasons.” The most important thing to remember is it only takes one buyer to buy your home.

3. It is easier to move up. If you are looking to buy a new home as well as sell your current home, then fall offers the best opportunity. You will enter the market with higher confidence and lower stress while sellers who were unsuccessful during the summer months will remain on the market desperate to sell. This will help negotiations work in your favor. 

The most important thing to remember is it only takes one buyer to buy your home.

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4. Different buyer demographics. While married couples and families often move early, millennials and those with kids who moved to college oftentimes wait until the fall. Employers also tend to wait until the fall to do their corporate relocations. Meanwhile, some buyers that do have the flexibility choose to wait to avoid the busy spring and summer markets.

5. You still have time to make those improvements. You will have time to finish all the little things you want to do before listing in the fall.

While you may be concerned that you have missed your chance, the truth is that now is a great time to sell. As long as you're positioned well for the market, you may see a very positive response from what are often motivated buyers.

If you have any questions about this or are interested in buying or selling, please feel free to contact me. I look forward to speaking with you soon.

3 Reasons Our 2018 Market Will Differ From 2017

We can expect our 2018 market to be different than what we saw in 2017 because of the new tax law, interest rates, and inventory levels.

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There are three main reasons why our 2018 market will be different than what we saw last year. 

The first reason is the tax law enacted toward the end of 2017. The first way people will be affected by this is through the mortgage deduction limit, which was reduced from $1 million to $750,000. If your personal mortgage balance is between $750,000 and $1 million, you’ll be affected. If it’s less than $750,000, you’ll be unaffected. 

The second way is through the state and local tax deductions, which have gone from being unlimited to being capped at $10,000. This is likely to affect a great number of people. If you’re an investor or a landlord, however, nothing changes at all. 

The third way is through capital gains exclusions. If you’re a home seller and you’ve owned the home you’re selling for two out of the last five years, nothing has changed. As far as the profit you might see from your sale, an individual can receive up to $250,000, and a married couple can receive up to $500,000 without paying taxes on it. 

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If you plan on buying or selling in 2018, it might be a good idea to do so sooner rather than later.

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The second reason 2018 will be different from 2017 is interest rates. Of course, we never know exactly what’s going to happen with interest rates—I always joke that my crystal ball is in the shop. Rates have slowly been creeping up, though, and there have been signs that they will be raised in 2018. One of those signs is the national unemployment rate, which is at 4.1%—a 17-year low. The recent GDP numbers are also higher. The University of Michigan also has a consumer sentiment that’s at a very high level. Furthermore, the Federal Reserve said they were raising interest rates three times this year. 

Granted, this expected rise can always be affected by world events, so that may change things. This rise is likely to happen, though, and should rates go up, it will affect both buyers and sellers. If you’re buying, it will cost you more to borrow money. If you’re selling, it changes who your buyers might be. This is why it might be a good idea to buy or sell earlier in the year before rates rise. 

The third and final reason 2018 will differ from 2017 is inventory levels. Condos in the lower price points in our Chicago market will likely have lower inventory levels and a shorter average days on market. In the suburbs and higher price points, we’ll likely see higher inventory levels and a longer average days on market. 

If you have any questions about our 2018 market or you have any other real estate needs, don’t hesitate to reach out to me. I’d be glad to help you.