As we head into the spring market, there are a few key points you should keep an eye on if you plan to buy or sell a home in the near future.
Thinking of selling? Get a free home valuation
Thinking of selling? Get a free home valuation
The first is inventory. As we head into the spring market, we'll see many sellers come out of hibernation after holding off on selling through the winter and the holidays. You can expect to see more homes come on the market, but inventory is still at an all-time low.
The absorption rate tells us what kind of market we're in. We calculate it by figuring out how long it would take to sell existing active inventory if no new houses came on the market. Looking at absorption rates from the past couple months—especially December—we see that we're at just one month. A regular market would be four to six months of inventory.
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It's still a great market for both buyers and sellers.
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Based on the 1.1 month absorption rate from December, we can see that we're in a seller's market. Anything below four months of inventory is considered a seller's market.
The second point to keep an eye on is that even though it's a seller's market due to low inventory, it's still a good market for buyers thanks to such low interest rates. Rates have crept up a little bit recently, so we'll want to watch whether rates continue to rise.
Rising rates can affect a buyer's purchasing power; a buyer who could qualify for a $400,000 home would only qualify for a $370,000 house if interest rates went up 1%. This could also put some downward pressure on home prices, but I'm not saying that will happen quickly. Historically speaking, though, interest rates are still really good and buyers will want to take advantage of it.
These are the key things you should look out for in the spring market this year. If you have any other questions about the Sacramento market or you're thinking of buying or selling a home, give me a call or send me an email soon. I'd love to hear from you!
