Download a step-by-step Buyer’s Guide
January and February has offered us a glimpse into the trends that are likely to shape the coming months, with inventory slightly down from December and the usual pre-spring hustle beginning to stir among sellers and buyers.
Inventory Trends: A Tight Squeeze Continues
One of the most telling indicators of the current market’s temperament is the inventory levels. This January, we’ve seen inventory decrease by 12% across Fairfield County, a significant contraction that continues to define the market. This reduction in available properties means that most homes entering the market are quickly absorbed, leaving fewer options for buyers, and maintaining a tight grip on the overall market dynamics. Demand among buyers remains high. Numerous homebuyers have been persistently searching for a property, while newcomers are just beginning their journey. As we approach the bustling spring market, this intensified activity is likely to continue.
Why We’re Facing a Housing Inventory Struggle
The crux of our persistently low housing inventory can be traced to a fundamental imbalance: a rising population and a shortfall in available homes. Across the country, we’re witnessing a population uptick that has not been matched by a corresponding increase in housing construction. This mismatch has led to a deficit, with the demand for homes now far outstripping supply. The math is simple – more people need homes than there are homes available. This undersupply is a national trend that is felt at the local level, particularly in sought-after areas like Fairfield County where the allure of community, amenities, and lifestyle draws more residents. The result is a competitive market where buyers must act swiftly and decisively, and sellers find themselves in a position of strength when listing their properties.
The Pre-Spring Momentum
Traditionally, the Spring market in real estate kicks into full gear by mid-February, with early birds starting to make their moves in January. This year is no exception, as home sellers begin the process of preparing their properties for market entry. The goal is to present homes in their best condition, maximizing appeal to potential buyers and creating excitement. I cannot stress enough the importance of preparation. Sellers should not take this lightly, even with a seller’s market, preparing your home and pricing it right is essential in a successful sale.
Despite these preparations, we have not yet seen an uptick in inventory levels. This scenario underscores the importance of timing for sellers looking to enter the market. With the current absorption rate(only 2.3 months of inventory), listing a property now or in the early spring could mean less competition and a quicker sale.
Price Dynamics: Under Pressure
With the ongoing squeeze on inventory, it’s no surprise that home prices continue to face upward pressure. For buyers, this means navigating a landscape where affordability and availability are tightly intertwined, making it more important than ever to be well-prepared and flexible in their search and purchase strategies. Staying in touch with your local lender regarding financing options and interest rate fluctuations is essential for a clear grasp of your home-buying budget.
Interest Rates: a tale of fluctuation
Interest rates have seen fluctuations throughout January, adding another layer of complexity to the decision-making process for buyers and sellers. Despite these ups and downs, rates are expected to stabilize in the 6% range throughout the year. This level is historically low but higher than the ultra-low rates we’ve seen in recent years, affecting affordability, and borrowing costs.
The Federal Reserve’s policy on interest rates is a critical factor to watch. While a cut in interest rates is now anticipated in the second quarter, there are no guarantees.
Looking Ahead: Navigating the Market
As we anticipate the onset of the spring market, both buyers and sellers must strategize carefully. Sellers should focus on getting their homes market-ready to capitalize on the early spring demand. For buyers, being pre-approved for a mortgage and ready to act quickly when the right property comes along will be key to success in this competitive environment. If you are looking to start your journey, email me for my free Buyer’s Guide. If you are considering selling now or in the future, let’s talk about the value of your home and preparation steps. (203) 650-6870