3 Signs Housing Might Be Entering a Buyer’s Market

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In the real estate market, home sellers have held the advantage over homebuyers for many years. But is that about to change?

A few key signs indicate that homebuyers might soon gain some ground in the housing market. To be sure, no one is predicting that we are entering an era of bargains galore. Any changes are likely to be modest, at least for now.

But here are a few reasons why buyers might soon be in a better position in the months ahead.

Home inventory levels are inching closer to normal

Real estate agent with "for sale" sign
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Nationwide, the number of homes for sale has now increased for seven straight months, according to Realtor.com.

As of May, there were 35.2% more homes for sale than there were at the same time in 2023. In a report on the state of the housing market, Ralph McLaughlin, Realtor.com senior economist, called the growth in inventory an “incredible trend.”

This May, 12 of the 50 largest U.S. metros recorded higher inventory levels than they did typically in the period between 2017 and 2019. That was up from just seven such markets in April.

Inventory levels have notably grown compared with their pre-pandemic levels in Austin, Texas (up 33.6%); San Antonio (31.8%); and Denver (22%).

A market with more homes for sale gives buyers a greater number of options and increased bargaining power. Over the long haul, higher inventory levels could either keep future price increases in check or even force prices down.

In the Realtor.com report, Sabrina Speianu, Realtor.com economic data manager, added:

“While the housing market is still in the seller’s territory, it is expected to shift in a buyer-friendly direction as mortgage rates resume their decline over the next year and the number of homes for sale increases.”

Home prices are starting to fall in some markets

Home price reduced
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In four major U.S. metros, home prices are beginning to slip.

Three of these markets are in Texas. Prices were down during the four weeks ending on June 2 in Austin (-2.9%), San Antonio (-1.2%) and Fort Worth (-1.2%), according to real estate brokerage firm Redfin.

Prices also were down in Portland, Oregon (-0.9%).

Nationwide, prices rose 4.4% during the period so any widespread correction remains a long way off, if it ever arrives.

Still, Redfin says that, on average, 6.4% of U.S. home sellers cut their asking price during the four weeks ending June 2, the highest percentage since November 2022. Homes are also remaining on the market for a longer period than they were earlier in the year.

Redfin says these are “early indicators that national price growth could soften soon.”

Condo prices tumble in some parts of California

San Francisco condominiums
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Newsweek reports that in some parts of California, condo sellers are slashing their asking prices. The publication says that of 8,476 California condos listed for sale on Zillow, 1,973 had price reductions, with some cut by as much as 40%.

The majority of price cuts were in markets in and around Los Angeles, San Francisco and San Jose, Newsweek reports.

Newsweek says a one two-bedroom, two-bathroom condo in the heart of San Francisco that sold for more than $2 million in May 2015 recently changed hands for just $1.17 million.

Falling condo prices in San Francisco likely reflect wider challenges for the city, Newsweek reports:

“The drop of condo prices in San Francisco is likely linked to the particular challenges the city has been facing since the pandemic, including the mass exodus of workers which have left several of its downtown offices empty.”

Do falling condo prices in California presage a trend that will spread to other markets? Time will tell.

Is now the right time to buy a home?

Homebuyer couple talking to realtor
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There are other signs that the housing market is becoming a friendlier place for buyers. For example, home inventory levels are surging in Florida, which could lead to bargains for some Sunshine State buyers.

However, it is important to remember that all real estate is local. When prices drop in one community, they often soar in another.

Ultimately, trying to divine housing market trends is likely to be as foolish — and unfruitful — as attempting to time the stock market.

Instead of trying to guess where housing prices are going, focus on the things you can control. Decide whether this is the right time for you to buy a home irrespective of where the market might end up.

Then, take the steps necessary to shore up your finances so you are in a good position to get a house you want at a price you can afford.

And to help protect yourself from making costly mistakes, check out “7 Dumb Mistakes That Cost Homebuyers Tons of Money.”

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