Is Orange County, NY currently a buyer’s market?
In real estate, there are three major types of markets. At any given point in time, it can be a buyer’s market, a seller’s market, or a balanced market. What do those terms even mean?
A buyer’s market means that buyers have more leverage than sellers when it comes to negotiating and purchasing homes. The supply of homes exceeds the demand. Because there are a lot of available homes in the market, buyers can take some time to decide which home they want. They may be able to negotiate a price on the lower end of potential market ranges, and may be able to get a seller to agree to contribute towards closing costs. The buyer might be able to get several repair items taken care of by the seller after inspections. Prices may decline as sellers compete for the interested buyers.
As you may expect, a seller’s market is the opposite. There are not a lot of homes available for sale, so as soon as a well-priced house goes on the market, buyers swarm in the front door. In this case, buyers can expect lots of competition for a home. They can expect multiple buyers will want the same home, and they need to be prepared to jump on the right one immediately. Because demand exceeds supply, home prices may rise during a seller’s market as buyers attempt to outbid each other. Sellers will often not be very negotiable during these periods in terms of making repairs, contributing towards closing costs, or being very flexible with prices.
In a balanced market, buyers and sellers are evenly matched in terms of opportunities to buy and sell. Prices are fairly stable. Buyers can find several options to choose from. Sellers are open to reasonable negotiations. Neither buyers nor sellers are in control of the market.
Calculating type of market
So how can we determine which market it is? One way is through anecdotal information. If buyers are complaining about how hard it is to find the right house, it could be a seller’s market. If sellers are complaining about having to continue to drop prices, and how they are having trouble selling their home, it could be a buyer’s market. But the easiest way to figure this out, is to calculate it. What does the data say?
To figure out the absorption rate (the speed at which homes are selling), take the number of homes available and divide by the number sold in the last month. That tells you how many months it will take to sell the existing inventory at the most current sales rate. I consider anything under six months to be a seller’s market and anything over 9 months to be a buyer’s market. If there are 6 to 9 months of inventory, I consider that to be a balanced market.
Orange County NY Markets
So how is Orange County NY currently doing? The above chart was prepared using data from mid-October 2017.
- First, there are different extremes in each category. For example, if you were to see two months of inventory in a particular area, that would be a very strong seller’s market. Prices could be increasing at a higher rate than they would in a seller’s market with 5-6 months of inventory left.
- Second, these statistics are only showing the average for each area. There could be subsegments of each market that are not the same as the overall market. For example, perhaps a particular development is having issues with construction or zoning and it is actually a buyer’s market in an area that overall favors sellers. Or perhaps a specific street always sells very quickly and experiences a seller’s market when the area in general is in a buyer’s market.
- Third, this data can change on a seasonal basis. In the Winter, houses may sell slower and move the market from a seller’s market to a buyer’s market. In the Spring, the market could move back again.
- Finally, a home that is over-priced and not selling is not an example of a buyer’s market. In order for homes to sell in any market, they need to be priced correctly for that specific market.