How’s the Market? Let’s Get Specific

Perhaps the most frequent question I’m asked is, “How’s the market?”

It’s an innocent enough of a question, but the answer is usually a question in return:

Which market?

Markets are not just a product or geography–they are also a price.

The market for a home is made up of existing and potential customers who need it and have the ability and willingness to pay for it. Because there are more who can and are willing to pay for a lower-priced home, the market is larger and more competitive at the lower price ranges.

So in real estate, the market consists, in part, of a group of people who have the willingness and ability to purchase a home in a particular geographic area. Remember, unlike the car or clothing market, real estate is uniquely local.

So how’s the market?

Comparing the absorption rate is the best way to answer the question. If we’re talking about the greater Phoenix-metropolitan real estate market, it’s a seller’s market below $300,000, it’s a transitional (balanced) market between $300,000 and $400,000, and it’s a buyer’s market above $400,000.

In my home area of Mesa, Arizona, the real estate market is similar, with a seller’s market below $300,000 and a buyer’s market above $300,000. Note that it’s technically a transitional market above $1,000,000, keeping in mind that it could be moving up or down.

Now the real gotcha…it’s still not enough to ask how’s the market by city. Mesa, for example, is the 38th largest city in the U.S.; larger than Atlanta, Georgia (#40), and Miami, Florida (#44), and just a quick observation will tell you that there is quite a bit of variety within the city limits.

If you really want to know what the market is like, we would respond by knowing the part of town you’re talking about. Typically, subdivisions have fairly well-defined price boundaries which articulates the market. And if you want the answer to how your subdivision is doing, you’ll need to give me a call! I’m happy to work it up for you.