How Do I Learn about Current Buying Trends in the Housing Market? – House Hunting Part 2

Welcome to House Hunting with Direct Energy! In this series, we’ll walk you through the fundamentals of shopping for a house, while also sharing a few crucial insider tips that will increase your knowledge and decrease your stress. We want your home-buying experience a positive one!

Understanding Important Home-Buying Trends


How Do I Learn about Current Buying Trends in the Housing Market? - House Hunting Part 2 | Direct Energy Blog
It’s time to do a little math.

Buying a house feels like a huge ball of stress and excitement all wrapped up into one life-changing event. Because it is such a big endeavor, it can take people months even years to plan for a move. Conducting even a little research into residential buying trends in your desired area can potentially save you money on your next house. Here are four key trends in the house hunting process to pay attention to so you get the best possible value on the home of your dreams!

1) Average Days on the Market

This pretty self-explanatory data point tells us how long it takes homes in your area to sell from the day a house goes on the market to the day it sells. Websites like Homesnap provide this information monthly, if not weekly. You can find the average days on market for your desired area and compare that number to the previous year or two to see how this year compares to previous years.

By knowing if the house that interests you has been on the market longer or shorter than similar homes in previous years, you increase your negotiating strength with the seller. This is especially true If the average days on market trends longer than previous years.

For example, Houston, TX was a huge sellers market in the early part of this decade. In various desired areas, sellers were seeing multiple contracts on homes the first day they went on the market, typically resulting in a bidding war among buyers. Fast forward a few years later with the oil and gas market down, sellers aren’t seeing the same movement. The housing market has slowed and, homes are staying on the market longer.

2) Month’s Inventory

How Do I Learn about Current Buying Trends in the Housing Market? - House Hunting Part 2 | Direct Energy Blog
Seriously – don’t be afraid of some basic calculations.

You can learn this information by taking the current number of homes for sale divided by the total sales for that same month. As the month’s inventory increases, it becomes a buyers’ market because houses are staying on the market longer and/or there is a surplus. If the number goes down, it becomes a sellers’ market as homes are being sold quicker and/or there is less inventory. This means buyers would need to move quicker on homes or pay higher prices to win the sale.

3) Average Sales Price

A site like Homesnap will take the average sales price for the homes sold in a given area in a given month. You can track the average sales price as well as listing price to see if the average pricing for your desired area is going up or down. This is most helpful if you look at the trends over a full calendar year. Buyers can use this information to help determine the direction the market is moving.

4) Annual Selling Cycle

How Do I Learn about Current Buying Trends in the Housing Market? - House Hunting Part 2 | Direct Energy Blog
“Look at all of this natural light entering your open floor plan concept! It’s exactly what you want in your new home!”

The residential real estate sales cycle tends to repeat itself each year. While it can differ slightly based upon your location, the basic buying and selling pattern still holds. Paying attention to this cycle can provide insight into pricing and activity in the market that you can use to your advantage.

  • Buyers will begin to see inventory increase starting as early as February and continue to increase into the beginning of summer. This is typically driven by weather warming up and end of the school year.
  • While supply is high during the spring and beginning of summer, the demand is also high at that time for the same reasons. So the high supply can be balanced out by the high demand, which can often drive up prices.
  • In the fall, supply and demand drop as kids head back to school and then drop more as the holidays approach. Thus, if there is a house on the market during that period, that could mean the seller is motivated, making it a good time to buy if you’re able to move during off-peak times of the year.
  • Selling virtually stops in the winter and resumes back in February and March.

What are other trends people should monitor as they start their house hunting process? Please share with us in the comments!