buyer's real estate market versus seller's real estate market

When buying or selling a home, it is apparent that both parties to the deal are after a situation that favors them most. Each wants the ‘best price’, but the definition of best will depend on which party you ask.

The seller would be laughing if s/he managed to coax the buyer into forking out the seller’s asking price, while for the homebuyer, well, let’s just say they are out for a deal they would label some nice piece of business.

But if wishes were donkeys, beggars would ride. In this earthly world we live in, homebuyers and sellers don’t always get the good end of the deal, and a lot of this has to do with the current housing market which determines who wins at any given time.

That’s right, the market could blow hot, or cold; lukewarm sometimes.

Please sheathe your forks and extinguish your torches, for I am about to hit you with some knowledge.

Buyer’s Market

If you are looking to purchase a home, a buyer’s real estate market promises the most ideal financial market in which to buy. This is because people looking to sell their homes outnumber those who want to buy.

The advantages for the buyer in this type of market can be two-fold.

There are more properties to choose from, increasing the chance of finding the perfect home. And two, housing prices could take a tumble, and even when they don’t, sellers usually tend to agree a lower price than they would ideally want to sell at, sometimes even resulting to staging and incentives.

It’s a classic illustration of what happens in any marketplace with a lot of competition. The buyer always benefits.

Signs of a Buyer’s Market

  • There are more homes available compared to previous months or years
  • The market still boasts more than six months of inventory
  • ‘For Sale’ signs are refusing to go away, the result of which is a longer days on market (DOM)
  • Active listing prices are lower than comparable sale prices
  • You notice real estate ads getting larger
  • Median sales prices are on the wane

Seller’s Market

A seller’s market favors the sellers because there is an influx of buyers than there are available houses. So, if you are looking to sell your home, there is no better time.

A seller’s market is what you’ll often here being described as a hot market, where there are a lot of serious buyers who are willing to part with more than just the list price. What this means is that you have high chances of selling your home not just quickly, but also for more than you ask for it.

Signs of a Seller’s Market

  • Compared to previous months/years, inventory is extremely low
  • The market has less than six months of inventory available
  • There are higher closing sale numbers due to more buyers purchasing
  • Median sale prices are on the up
  • Active listing prices are higher than comparable sale prices
  • Real estate ads are growing smaller
  • ‘For Sale’ signs don’t stay up for long before you notice a pending or sold sign attached

Balanced or Neutral Real Estate Market

As the name suggests, neutral or balanced markets are anyone’s, with the number of buyers and sellers almost equal. This means the market does not experience volatile swings in any one direction as the scales don’t tip in favor of either.

Typically, interest rates tend to be affordable during a neutral market.

Signs of a Balanced Market

  • Three to six months of inventory is on the market
  • Inventory is normal juxtaposed with previous months/years
  • Median sales prices are flattened
  • Sales numbers have stabilized
  • Property advertising stays uniform
  • It takes roughly 30 to 45 days for ‘For Sale’ signs to be replaced with pending or sold signs

Now you know.