Local Market Sentiment

The local housing market is arguably the most important variable when it comes to home sale price and the speed of sale. Local housing markets are largely dependent on economic conditions, which have a variety of drivers. Although there are some common national economic factors that influence local markets, like interest rates, there can be significant diversity in economic conditions among cities or states across the nation.

There are many other small factors that also influence the equation, including local regulations, state taxes, local crime rates, infrastructure development and school district quality. None of these variables are static, and positive or negative changes can influence the ease and profitability of home sales in the local market.

Supply and Demand Dynamics

Many homebuyers and sellers are familiar with the concept of a “buyer’s market” or “seller’s market.”

A buyer’s market is one in which the supply of homes for sale exceeds the number of buyers demanding homes. Buyers in these markets have more options, and the slower rate of sales puts downward pressure on home prices. Home sellers attempt to attract a limited number of buyers by lowering their asking prices.

In a seller’s market, the demand for homes exceeds the supply of homes for sale on the market. Buyers must then compete for limited inventory, driving up prices and causing the limited number of homes available to sell more quickly. Homes in desirable, high-demand areas benefit most from a seller’s market, often selling above asking price due to bidding wars between motivated buyers.

Is It Possible to Duplicate Seller’s Market Characteristics in a Buyer’s Market?

How a home is priced and marketed can instill a sense of urgency among home shoppers, even in a buyer’s market. Time on the market is a key factor in the perceived attractiveness of a property, which is why thoughtful pricing is important. Many home shoppers avoid properties that have been on the market much longer than other homes listed in an area.  

A seller’s real estate agent can also influence this perception by creating a fear of missing out. For example, home shoppers attending an open house with many other qualified buyers will infer that there is a lot of interest in the property. This inspires competition among the buyers attending, who will perceive the home as being a scarce resource that is highly sought after.

This strategy can potentially be effective in any type of real estate market, especially when the home’s exterior and interior are optimized with strategic improvements and thoughtful staging.

Interest Rates and Affordability

Typically, buyers are more likely to enter a local housing market when interest rates are on a downward trajectory. An influx of home shoppers increases competition among buyers and can potentially lead to rising home sale prices.

Conversely, higher rates can cool down the market, leading to slower sales and more aggressive price negotiations. As of November 2024, mortgage rates are down about a percent year over year. Although most analysts aren’t predicting a rapid drop in rates in 2025, the perception is that rates will decline further as post-pandemic inflation continues to ease in the coming years.

Seasonal Trends

All local markets are subject to some degree of seasonality, although the degree to which seasonal trends affect a housing market can vary depending on demographics and climate.

Temperate areas without wild summer or winter temperature swings might see steadier demand throughout the year. Areas that have a high percentage of families with children may see more activity during the summer when children are out of school.

Typically, spring and early summer see faster sales and higher prices due to increased buyer activity, while fall and winter may induce slower sales and price reductions. However, climate plays into the seasonal effect on local markets. For example, the seasonal effects in the Phoenix, AZ metro area can be far different from the effects in Chicago, IL.

Phoenix’s mild winters are ideal moving weather. Movers don’t have to contend with snow and ice, which can make driving trucks and moving furniture more difficult and dangerous. The intense heat of a Phoenix summer can have the opposite effect, potentially making the exertion of moving physically dangerous.

Although the broad generalization that summer is better for selling is largely true across the U.S., you should speak with an experienced local real estate agent to learn about seasonal fluctuations in your housing market.

Market Sentiment

Market sentiment is not uniform across the country. Interstate migration trends, or even migration between neighborhoods or suburbs within a metro area, can have dramatic localized effects on real estate markets.

Buyers shopping in “hot” local markets typically feel a sense of urgency, even national economic conditions may not be conducive to a seller’s market. Conversely, negative press about local crime, school performance or overpricing can lead to slower sales and reduced buyer enthusiasm. 

Should You Wait to Buy or Sell a Home Until Local Market Conditions Are Perfect?

Unfortunately, if you put off buying or selling a home until the local housing market reaches peak favorability, you will likely miss profitable opportunities. Although you can monitor local housing market conditions and interest rates, there’s no surefire way to determine if conditions will be favorable a year or two in the future.

It’s often not worth putting off a needed move, especially when the difference in price or rate might end up being miniscule.

What can have a much greater impact on home sale speed and price is the real estate agent who represents you in the home selling process. The team at 72SOLD utilizes a proven process to identify qualified buyers, create a sense or urgency and attract multiple offers above starting price. You can learn more about our process and get our price for your home by filling out the form on our website.