Question: At a macro level, are we in a buyer’s or seller’s market?
Economists measure markets by months of housing supply, which is determined by dividing the number of homes listed for sale (housing inventory) by how many homes are being sold per month (absorption rate). Economists have determined that a well-balanced housing market, one that is neutral to buyers and sellers, has six months of housing supply. If there is less than six months of supply, it’s a seller’s market and if there is more than six months of supply, it’s a buyer’s market.
It’s a Seller’s Market
Arlington is a seller’s market and has been for a long time. The table below shows just how short the entire market is on housing – nationally, regionally, and locally.
March 2016 Housing Supply (months)
Arlington hasn’t had more than 5 months of housing supply in the last 10 years:
Mid-Atlantic housing supply 10-year trend:
Northern Virginia housing supply 10-year trend:
Washington D.C. housing supply 10-year trend:
Certain Buyers Hold More Bargaining Power
I took a deeper look into some of the Arlington sub-markets and found that in the $1M+ price range, the market is almost balanced with over five months of supply in March, whereas the $600,000-$800,000 market is by far the most competitive for buyers with just 1.13 months of supply in March (.81 in February!). This is due to the absorption rate being nearly five times higher for the $600,000-$800,000 range and there being about three times more active listings priced at $1M+.
Additionally, the three bedroom market is the most advantageous for sellers, with only 1.45 months of supply, whereas the buyers hold the most bargaining power on five bedroom homes, with 4.11 months of supply available, likely due to a trend I identified in a previous article that more new Craftsman builds are going with five bedrooms instead of four.
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This is great news for potential sellers in Arlington. The good news if you’re a buyer? You’ll eventually be a seller! And based on our 10-year trends, you’ll be at an advantage!