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5 Signs Your Housing Market Will Go Down

If your local real estate market is about to drop, you want to get your house listed before it’s too late. If you’re thinking about selling your home but aren’t sure when to put it on the market, here are five signs to keep an eye out for.
If your local real estate market is about to drop, you want to get your house listed before it’s too late. If you’re thinking about selling your home but aren’t sure when to put it on the market, here are five signs to keep an eye out for.

If you’re contemplating whether to sell your house, one thing you might wonder is just how stable your real estate market is. You don’t want to sell your house right before prices go up, but more importantly, you want to sell before prices go down.

So, how can you tell if your local real estate market is cooling off?

Talking with a professional real estate agent is an essential step for timing your market. Working with a top agent in your area will ensure you list your home at the optimal time.

> Get connected with a local agent for a free, no-obligation consultation.

To give you some basics on timing your market, here are five signs your housing market is about to go down.

1. Homes Are Staying on the Market Longer

When a real estate market is hot, houses don’t stay on the market long. Some properties even sell the same day they’re listed.

When a market starts to slow down, so do its sales. Houses spend longer and longer on the market before they’re sold. Some go through multiple listings.

The longer homes stay on the market, the lower prices go down.

It’s common for properties to spend a couple of weeks on the market, but if a lot of homes in your market stay on the market for months at a time, that’s a bad sign.

2. Home Values Are Stagnant or Decreasing

Keep an eye on home values in your area. Home value estimate websites and the Federal Housing Finance Agency’s housing price index (HPI) are great tools to track home values in your town or neighborhood over time.

Note historic patterns in your area. Are values going up or down? How fast? What do trends look like over the last year, five years, ten years, and twenty years? This data will help you spot overall trends.

The American real estate market tends to go through cycles. Typically, after a housing crash, like the one we saw in 2008, there’s a 17 to 18 year-long pattern where the market recovers and expands before leading to oversupply and recession.

3. More and More Houses Are Being Listed

A drastic increase in the number of listings in your area can be dangerous, especially when combined with falling prices.

Compare the average number of homes sold each month to the average number of homes listed. The more sales per month, the better things are for your local market.

4. Sellers Are Reducing Their Listing Prices

Sometimes, people price their homes too high and have to reduce the listing price before making a sale. That’s normal. But when it becomes a pattern, that’s something to look out for.

It’s typical for a handful of homes in any market to reduce their asking price before eventually selling. Some sellers simply price their homes too high; others use it as a pricing strategy, making the lower listing price look like a steep discount.

A pattern of reductions in listing price can indicate a slowing market. When a lot of listing prices need to be reduced, it can be a sign that demand and home values are going down.

5. Mortgage Rates Are Increasing

Mortgage rates can help you see where the real estate market is headed. When interest rates go up, the number of people who can afford to buy a home goes down.

If you’re seeing an increase in mortgage interest rates in your area, it can be an indication that prices are about to drop. People paying more money to their mortgage lenders means they have less money to put towards the home itself. Some people are priced out of the market altogether. This reduces demand, meaning homes spend longer on the market and prices go down.

Is Now a Good Time to Sell?

If you’re trying to figure out the best time to sell your home, it’s important to keep an eye on your local market. If you’re seeing a lot of properties spending months on the market and reducing their listing prices, that can be a sign that you should think about selling sooner rather than later.

If you’re trying to figure out whether it’s the right time for you to sell, talk to a local real estate agent. Local realtors know what signs to look for and are experts in figuring out when a market is about to cool off.

Clever Partner Agents are all top-rated in their areas and can help you figure out the right time to sell. Contact us today for a free, no-obligation consultation.


Andrew Schmeerbauch

Andrew Schmeerbauch is the Director of Marketing at Clever Real Estate, the free online service that connects you top agents to save on commission. His focus is educating home buyers and sellers on navigating the complex world of real estate with confidence and ease. Andrew has worked on projects for the United Nations and USC and has a particular passion for investing and finance. Andrew's writing has been featured in Mashvisor, L&T, Ideal REI, and Rentometer.

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