If you’re thinking of buying or selling a home, it’s useful to know what’s happening in your local real estate market. Understanding the differences between a seller’s market and a buyer’s can be very helpful. It will help set your expectations for buying and selling, and you may be able to utilize a certain market to your advantage. So what exactly is the difference?
Seller’s Market
A seller’s market is when there is higher demand than there is supply, or in other words, there are more buyers than there are houses to sell. Buyers end up competing with each other for homes, which gives sellers an advantage. There are often quicker closings and higher prices. Sellers have increased negotiating power, and buyers will be more likely to accept flaws or drawbacks in a home that they might not otherwise. There may be bidding wars in which sellers receive multiple competing offers, which can significantly drive up the price of a home.
An interesting factor in a seller’s market is that there are often homeowners who want to sell but are worried they would be unable to find a new home to buy because of the market conditions. If these potential sellers put their homes on the market there would be increased inventory, and the seller’s market could neutralize.
Seller’s markets are created when there’s high interest in buying, low inventory, low interest rates, or some combination of those factors. It can be a great time to sell your home, especially if you are relocating to a less competitive market, downsizing, or have other living arrangements planned that would not require buying in the seller’s market.
Buyer’s Market
A buyer’s market is when there is higher supply than demand, or in other words, more homes on the market than buyers looking to purchase. Buyers have an advantage as homes stay on the market for longer, prices decrease, and sellers are more willing to accept lower offers or other contingencies to sell their homes.
Buyer’s markets are created when there’s low interest in buying, high inventory, high-interest rates, or some combination of those factors. It's a great time to purchase a home, especially if you are a first-time homebuyer and do not need to sell. During a buyer’s market, there are more options for homes available, often at lower prices. You’ll likely be able to take your time and negotiate with sellers on price, seller’s concessions, and contingencies.
How to tell which market it is
You can tell if it’s a buyer’s or seller’s market by looking at inventory, recent sales, and average time on the market. If the current inventory seems high with many days on market and price reductions, that’s a sure sign it’s a buyer’s market. If there seem to be few homes on the market that are selling fast and for over asking, it’s likely a seller’s market. You can always speak with an experienced REALTOR® who will be familiar with your local market to get some insight on whether it’s a good time to buy or sell.
Regardless of the fluctuations of the market, the timing of when to buy or sell is a very personal decision that should be made on your schedule. While it’s helpful to be aware of market trends, there are so many other factors that can influence your decision. We recommend you do some research, be aware of the market, but ultimately, make the decision that feels right for you.
Looking to buy or sell? We have a ton of resources available for both buyers and sellers. Or take a look at our agent list or contact us to speak to our experienced agents today.
