"How's the Market?"

 Its the #1 question I get. "Hey Meg! How are you? How's the market right now?!" 

Its how most people engage with me. 

And that makes sense! 

If you heard about something major happening to teeth in the news, you'd probably bring it up to your dentist. If you knew there was a building boom, you'd probably bring it up in conversation with your contractor next time you saw them. 

People hear about real estate OFTEN. Its a massive part of our economy and its often part of the news, especially when we are in a high or a low (which we are!). But one of the reasons people ask that question is they also have a stake in the game. Either they are looking for a house, or know someone who is and is struggling to find something, or they own a home and are excited/relieved about the sellers' market conditions. 

So knowing WHY someone is asking this is key. 

But what I recently realized is my usual response wasn't providing much value. 

I would say something to the affect of "Oh man, its crazy right now. There's no inventory and its tough out there for buyers! The other day I put in an offer on something that had 25 offers in a day!" 

Ok, its true, and it sounds like a dramatic response that might get someone's attention. But other than maybe confirming someone's suspicions, it doesn't add any value and it might not actually answer their question. 

So what does? 

Data. 

Always.

So how might I answer this question with more value? 

Affordability and Average Price Points 

With homes increasing in value by 10-20% in one year, the price points are starting to get away from many buyers. 

There was a 2021 affordability study done that showed in the greater Philly/NJ area, a household would have to bring in $75-100k in order to have access to 59% of the market. In order to be able to afford 75% of the market? You'd have to make $125-150,000. That is a stretch for many buyers, especially Millennials and single people who are on one income and may have larger debt ratios and less money to put down. And of course, that doesn't even broach that much of that inventory is probably not the home they want to buy. In order to have access (not even actually win the offer of course) to the majority of homes, you need to make well over $250,000. And if home values continue to make even modest gains over the next year, rents rise over home values and more buyers flood the market, those numbers will get even steeper. 

Thats much more interesting right?!

Inventory via Absorption Rate 

Another aspect that feeds into the above and is a hot topic right now is inventory. But how do we look at that? If I pull up all of Philadelphia, Montgomery, Chester, Delaware and Bucks County inventory right now, its going to pick up tens of thousands of residential properties. Seems like enough, right? 

But if you look at individual markets we can start looking at absorption rates, which is how long it might take all of the inventory to be absorbed by the market. In a balanced market, that would be 6 months. Anything less than 6 months of inventory, is a sellers market. 

Right now, most of greater Philly is at TWO WEEKS! Yep, thats right. 

My data on the Main Line over the last 30 days suggests there is about a 9-14 day inventory absorption rate. That means if nothing new comes on in 9-14 days, EVERY listing will be gone. All of it. 

Again, much more telling, right?

Showings and Buyer Activity 

This is an interesting one I look at when I am about to list a property. What do comparable sales see in terms of buyer activity and number of showings before a contract. 

The thing that will be interesting about how this affects the market is that low buyer activity numbers or low showing numbers might have nothing to do with interest. First, if a home is on and off the market in 48 hours, while the sellers might have allowed 50 showings, they might have also just wanted to take the best offer after the first 5 showings. 

Further, strategies are different for listings. One might take the best, first offer while the other might leave the home open to showings for 3-4 days and then ask for offers on Day 5, meaning they will obviously have more showings. 

And of course, virtual showings - increasingly common because of Covid, buying outside of your drivable zone and because properties are so hot they are being bought before being seen in person - are an option, those may not be logged by showing data collection. 

Also an interesting aspect of the market, right?! 

So, what would you like to know about the market?! 

This time I'll have a better answer for you!