When people talk about “the Housing Market,” it’s like talking about America – there’s a lot of diversity that is difficult to tie up into a neat little package. Every market is different, and part of being a successful home buyer or seller is figuring out the specifics of your market and using them to your best advantage. Pittsburgh, Pennsylvania was ranked one of the best 2012 housing markets.
Buyers in small markets, from the stereotypical small town to the wide-open rural to other areas with fewer homes and little movement, have a unique set of challenges.
Small markets are typically slow. This is because small areas don’t have a lot of motion in the housing market: not a lot of people moving in, and a greater tendency to stay put. This means that when people do move out, those homes can sit on the market for a long time waiting for someone to come in to claim them. With a greater tendency for people to leave small areas for bigger ones, it can be quite common to have more people moving out or on than there are next-generation homebuyers to replace them as homeowners. In these small, slow markets, sellers don’t see a lot of traffic; homes can sit on the market for a very long time unoccupied.
This means that even though buyers don’t have a lot of options, they do have the luxury of time and the power of price. Time allows buyers to really shop around and consider all the available options with far less danger of losing an opportunity to another buyer. With little competition, buyers can negotiate prices based on the weakness of a small, slow market, getting nicer homes, bigger lots, or better concessions than other markets might offer. The longer a property has been sitting on the market, the more reasonable the price is likely to be. Sitting unoccupied, though, also leaves a property more open to damage and disrepair.
Despite the lack of competition, having limited options does mean that buyers have to have some flexibility. They might have to consider many nearby areas, such as neighboring small towns, or consider more rural settings. They might have to wait out a short sale or foreclosure, or simply wait for a suitable home to come available.
Buyers might also find that existing homes just don’t suit their needs. This requires buyers to look for homes with ‘potential’ for upgrades, renovations, or additions, or look for land to build their own custom home. While building a home in a small slow market usually means that land is cheap, it doesn’t mean that building is cheap. Areas with little current construction don’t often have the resources and personnel for new construction, meaning that contractors have to commute in from larger areas and ship in their supplies – all of which adds up construction costs.
Other options also include pre-fabricated or manufactured homes, which can be ‘built’ on a lot very quickly for less than new frame construction. Temporary residences (such as rentals, RVs, trailers, even tents!) are also an option for a quick housing solution while waiting for an existing house to come on the market or a new one to be built.
Small, slow markets can be a big challenge for buyers wanting a move-in ready home fast, but patient buyers can find deals on diamonds (or diamonds in the rough!), or create their own.
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About Geoff Thompson — Geoff Thompson is an Owner and Founding Partner of Colibri Real Estate, LLC. which operates online education providers Colibri Real Estate, Insurance License Express and License Tutor. Follow him on Twitter.