Real estate markets are constantly changing. We’ve been experiencing a seller’s market in Franklin County and throughout much of the Pioneer Valley for several years, but no market stays the same forever.
Real estate moves in cycles, transitioning from a seller’s market to a balanced market, then to a buyer’s market, and eventually back again. What varies is how long we remain in each phase of the cycle.
The important question isn’t necessarily when the market will change, but how we recognize the signs that a shift may be underway.
Understanding the Three Types of Real Estate Markets
Seller’s Market A seller’s market occurs when demand for homes exceeds the available supply. With more buyers competing for fewer properties, sellers generally have the advantage. Homes tend to sell more quickly, multiple offers are more common, and buyers may have less negotiating power.
Balanced Market A balanced market occurs when the supply of homes and buyer demand are relatively equal. Neither buyers nor sellers have a significant advantage. Homes typically take longer to sell than in a strong seller’s market. As a general guideline, properties may take approximately 60 to 90 days to go under agreement, with roughly four to six months of available inventory.
Buyer’s Market A buyer’s market develops when the supply of homes exceeds buyer demand. Buyers have more properties to choose from, homes generally remain on the market longer, and sellers may need to be more flexible with pricing and negotiations.
What Are the Signs That the Market Is Changing?
Market transitions don’t usually happen overnight. Instead, we begin to see changes in several important indicators.
❖ Increasing Days on Market: Homes begin taking longer to go under agreement.
❖ More Price Reductions: Sellers may need to adjust their asking prices to attract buyers.
❖ Growing Inventory: More homes become available, giving buyers additional choices.
❖ Fewer Multiple-Offer Situations: Competition among buyers begins to ease.
❖ Changes in List-to-Sale Price Ratios: Fewer homes sell above asking price, and buyers may have more room to negotiate.
❖ New Listings Outpacing Pending Sales: When more properties enter the market than go under agreement, inventory can begin to build.
No single indicator tells the whole story. It’s the combination of these trends over time that helps us understand whether the market is moving toward a more balanced position.
A Slowing Market Is Not Necessarily a Declining Market
This is an important distinction.
In a slowing market, the pace of real estate activity begins to ease. Homes may take longer to sell, buyers may have more negotiating opportunities, and the rate of price appreciation may moderate. However, home values can continue to increase even as the market slows.
A declining market is different. It means actual home values are falling, something that needs to be established through patterns of comparable sales over time.
A seller reducing the asking price of an individual property doesn’t automatically mean home values throughout the community are declining. Likewise, an increase in days on market doesn’t necessarily mean we’re heading into a buyer’s market.
A market can become less competitive without experiencing an overall decline in home values.
Why We Look at Year-Over-Year Market Comparisons
When reviewing local real estate statistics, I focus on year-over-year comparisons rather than simply comparing one month to the next. Real estate is seasonal, particularly here in New England.
For example, homes may take longer to sell in November or during the winter months than they do during the busy spring market. That doesn’t necessarily indicate a shift in market conditions.
Comparing the same period from one year to the next helps provide a more meaningful picture of what’s happening.
We also need to look beyond median sale prices. Inventory levels, pending sales, days on market, and list-to-sale price ratios all contribute to understanding the direction of the market.
Real Estate Is Local, and Market Conditions Can Vary
One of the most important things to remember is that there isn’t just one real estate market.
Conditions in Greenfield may be different from those in Deerfield, Northfield, Montague, or Amherst. Even within the same community, market activity can vary depending on price range, property type, and available inventory.
A particular price range may continue to experience strong buyer competition while another begins to show signs of slowing. That’s why local market knowledge and a careful review of the numbers are so important.
The Bottom Line
Real estate markets are cyclical, and changes are a normal part of the process.
Rather than trying to predict exactly when we’ll move from a seller’s market to a balanced market, it’s more useful to recognize the indicators that tell us conditions are beginning to change.
For buyers, understanding these changes can help identify opportunities. For sellers, recognizing shifts early can make a difference in pricing, preparation, and marketing strategies.
Whether you’re considering buying or selling, understanding what’s happening in your local market is the best place to start.
If you’d like to discuss current real estate conditions in your community or how they may affect your plans, I’m always happy to help.
Corinne Fitzgerald
FITZGERALD Real Estate
Serving Franklin County and Beyond
413-320-9509
[email protected]
FITZGERALD-RealEstate.com