FAQ Section
1. What defines a seller’s market in real estate?
A seller’s market is characterized by limited housing supply and strong buyer demand, typically reflected in fewer than 5 months of inventory. In this environment, sellers have a competitive edge—homes sell quickly, often at or above asking price, and multiple-offer situations are common. The lack of inventory creates urgency among buyers, which drives price appreciation and reduces negotiation power for buyers. This type of market often occurs when economic conditions are strong, interest rates are low, or population growth outpaces new housing development.
2. What is a neutral real estate market?
A neutral market exists when housing supply and demand are relatively balanced—typically between 5 and 7 months of inventory. Neither buyers nor sellers have a significant advantage, so transactions tend to follow more traditional timelines with fair negotiations. Home prices remain relatively stable, and market activity slows to a more sustainable pace. This environment is often preferred by long-term investors and move-up buyers because it allows for level-headed decision-making without intense pressure. It can also be a transitional phase, signaling a market shift in either direction.
3. What indicates a buyer’s market?
A buyer’s market occurs when there is more than 7 months of inventory available. This means supply outpaces demand, giving buyers greater leverage. In these conditions, sellers may need to make price reductions or offer incentives to attract buyers. Homes tend to stay on the market longer, and buyers have more options and negotiation power. This type of market may develop after a surge in new listings, rising interest rates, or economic uncertainty that dampens demand. Investors often view buyer’s markets as opportunities to purchase below peak pricing, especially when motivated sellers are involved.
4. How is Months of Inventory (MOI) calculated?
Months of Inventory is calculated by dividing the number of active listings by the number of homes that go under contract (or sell) in a given period—typically monthly. For example, if a city has 600 active listings and 100 pending or sold homes in the last 30 days, the MOI would be 6 months. This metric helps gauge market speed and direction. A low MOI signals strong demand, while a high MOI reflects oversupply. MOI is widely used by agents, appraisers, and economists to measure housing balance and forecast pricing trends.
5. Do market conditions vary between cities in the Austin area?
Yes, market conditions can vary significantly even within the same metropolitan area. Cities like Cedar Park, Hutto, and Round Rock may be in a seller’s market due to affordability and strong demand, while markets like Spicewood or Marble Falls may show signs of a buyer’s market due to higher price points or slower absorption. Factors like school districts, commute times, new construction, local job markets, and neighborhood development all influence supply and demand at the city level. That’s why hyperlocal data is essential—averages for the Austin region may not reflect the reality in each zip code or community.
