Signs of a Healthy Housing Market
A healthy housing market is a good sign for everyone involved. It means that everyone is (at least mostly) happy with their real estate transactions and that the economy is running well. Of course, a healthy housing market may be challenging to spot, so today, we’re looking at a few indicators to help determine whether or not a housing market is healthy.
One sign of a healthy real estate market is that prices are neither rising nor falling too quickly. A steady price increase is ideal, but the market is doing okay if prices are not climbing or falling rapidly or swinging from one extreme to the other. If prices are quickly rising, sellers will benefit. And buyers will benefit if they are rapidly declining.
A second sign of a healthy housing market is that properties are on the market briefly. If houses sit for months, demand is not meeting supply, and the market is out of balance. If this occurs, buyers will get a better deal than sellers. Of course, there will always be some houses that buyers are not interested in, but the market may be unbalanced if many homes are not getting offers.
Another signal of a healthy housing market is that it is difficult to find short sales and foreclosures. When there is an abundance of short sales and foreclosures, this means the economy could be doing much better, and sellers will be unable to meet most basic buyer requests. Sellers will also lose money in the deal, making short sales and foreclosures strong indicators of an unhealthy housing market.
The last indicator we will look at today is housing affordability. A quick search on Google will tell you the median home price and household income. And a look at the National Association of Realtors’ Housing Affordability Index will specifically tell you what percentage of people can afford the median price for a typical home. Housing affordability gives more objective numbers than previously mentioned signs of a healthy housing market; however, NAR does not measure every community you may be interested in conducting real estate.
Overall, it’s best to ask a local real estate professional whether or not the housing market is healthy. News outlets and your friends can’t always give you the complete picture, and even if the housing market isn’t perfectly balanced, it may still be in your favor. Understanding the housing market can be difficult, so get a professional on your side today!
