Looking to buy a house or sell a house this year? There’s a good chance you know the housing market is booming, pretty much all over the country. East coast, West coast; no matter which side of the country you’re living on, there’s a good chance the housing market is healthier than it has been in years.
But how do you tell if a housing market is healthy, or not?
At a very basic level, you can understand the real estate market using supply and demand as your metric. When inventory is low and too few houses are for sale, the prices of houses will rise. If there are many houses for sale on the market, and the inventory exceeds the demand then the prices will fall to attract more buyers.
When these two features are balanced, home prices sell closer to their true value. There aren’t any obstacles in play, like there typically are when the housing market is unhealthy. Some obstacles include bidding wars and insanely high prices. However, they’re not the only ways to assess the housing market.
Ways to Check Your Local Housing Market’s Health
Assessing the health of your local real estate market is easy, especially if you do a little research.
How long have homes been on the market?
When homes have been on the market for over 90 days, you can believe that’s a sign something may be wrong with the property. Alternatively, there may be something wrong with the local market, suggesting the price on the home is too high for that market.
Check in about the median time homes are on the market for. This is something you can research yourself, or discuss with a real estate professional.
How are the prices?
If prices are falling and rising rapidly, you can bet there are issues with the health of the local real estate market. Quickly rising and falling prices can indicate the market is out of balance (remember, supply and demand!).
An annual increase of say, 5 percent is healthy for homes on the market. Increase or depreciation above or below that level can indicate an imbalance of the market.
What about foreclosures?
Foreclosures are a sure-fire way to diagnose an unhealthy real estate market. This can drive down home prices, and a healthy real estate market thrives on limited foreclosures.
The Raleigh-Durham and Triangle Housing Market
According to a study on the healthiest housing markets in the United States, both Durham and Raleigh made the top 15. While Durham came in at No. 14 nationally, Raleigh came in just behind at No. 15.
Each housing market was diagnosed based on stability, risk, ease of sale, and the affordability of the area. The study, done by SmartAsset, scored Durham at a healthy 82.71 thanks to those factors. Raleigh scored 81.21.
So let’s talk about the factors that helped SmartAsset score the housing markets of the United States. How long people lived in their homes, and the number of homeowners with negative equity contributed to the stability factor. Risk is calculated by percentages of homes decreasing in value. Ease of sale is accounted for by data on the average time a home for sale hangs out on the market. The shorter the time, the better! And finally, affordability is assessed by monthly home-owning costs, as well as income in each city or county.
Other North Carolina cities made it onto SmartAssest’s healthy housing market list. Charlotte ranked No. 21, Winston Salem ranked No. 47, and Greensboro ranked No. 48. These cities represent healthy housing markets, and indicate North Carolina has a good real estate market.
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