Buyer’s Market vs. Seller’s Market:  

You have heard the terms thrown around before but what do they really mean? How do they affect you as a buyer or a seller? The market and its current state have a huge impact on how you should act and prepare. Working with your agent you can get a better understanding of these terms and learn how they influence your specific local market.

Buyer and seller markets come down to simple supply and demand. If the supply is low and demand is high, you have a seller’s market. If supply is high and demand is low, you are in a buyer’s market.

What is a Seller’s Market?

A seller’s market is when there are fewer homes for sale than buyers. This gives sellers an upper hand, causing prices to increase and the average number of days a home is on the market to decrease. This type of market is competitive for buyers who must compete for a small number of homes.

What is a Buyer’s Market?

A buyer’s market exists when there are more homes for sale than potential buyers in the market. This gives buyers more negotiating power and flexibility. Sellers should expect lower offers and seller concessions.

How to determine which market you are in?

Working with your agent, there are a few pieces of information that you can look at to determine what kind of market you are in.

  1. Inventory of Active Homes for Sale: This will give you a sense of the current supply in your market. A higher number means a surplus and a low number indicates a shortage of homes.

  2. Sale to List Price Ratio: This is an indicator of how much the buyer purchased a house for. If the ratio is consistently 100% or higher, you know that offers are competitively priced based on the list price. This will help you to know how to craft an offer.

  3. Average Days on Market: How many days is a home listed before it goes under contract? If homes are selling quickly, there is a high demand and likely multiple buyers. The longer a house is unable to sell, the slower the market. This number will give you an idea of how quickly you will need to move when crafting an offer to buy or looking to sell.

Understanding your current local market is an important factor in knowing what to expect. It gives you valuable insight into how quickly you need to move, the type of offer to craft, and how much flexibility or control you have as a buyer or a seller.