Real Estate Market Condition

4 Replies

Quick question, when someone says that the marketing is bad/good, how do they know? Is there some magic ball that tells them? I'm a new investor and would like to know how to find out if the real estate market is booming or not. Thank you!

@Brennan Taberna the market is not good or bad, it just swings from a Seller's market to a Buyer's market and back. Right now we are in a Seller's market and have been for 7 years. The Seller's have the upper hand, they dictate the price - hence it's going up. 

We have more demand than supply, which get's measured in average days on market DOM. Anything over 6 months indicates a Buyer's market (aka slow, properties are not selling, sellers are dropping prices), anything under 6 months (180 days) indicates a Seller's market (aka a hot market, more demand than supply, prices go up, multiple offers etc).

A local broker should be able to provide you with DOM for your market and a complete break down by price segement (hint: luxury price segemnt is often slower) and also changes over time, so you can see a trend. In Milwaukee we are currently at 18 DOM, which is insane, so if we slow down 3x we would be at 60 DOM and that would still be a hot Seller's market.

When they say good, they are typically referring to a sellers market and when they say bad they are typically referring to a buyers market

It's always an opinion. To say that a market is going to shift by x date is pretty objective and it has to be market specific. For example, being in the New England market we are more insulated than the Mid West cities because of our industries. While the market correction would definitely effect us, the % of decline is less and we are able to recover at a faster rate than other areas of the country. We also pay a higher price for properties as an exchange.