How To Tell if It’s a Buyer’s or Seller’s Market?

The real estate market is always changing, swinging in favor of buyers or sellers, and sometimes a little bit of both. If you plan to buy or sell a home, it’s important to know what kind of market you’re in so that you can make the best strategy with your real estate agent. What market trends signal a buyer’s market, what defines a seller’s market, and what if it’s a little bit of both? We’ll explain some key indicators of different types of real estate markets.

Buyer’s Market: When Supply Is Greater Than Demand.

In a buyers’ market, real estate supply exceeds demand. During this time, real estate inventory is high. There are plenty of properties on the housing market for home buyers. Homes typically spend more days on market listing sites compared to times of housing shortages.

When the number of homes is high, but demand is low, the market must respond. Real estate market values will decrease during these times, and homes will sit on the market waiting for a buyer. To stimulate home sales, sellers must make concessions such as lowering home prices, offering to pay closing costs, and agreeing to make repairs after a home inspection.

Seller’s Market: When Demand Is Greater Than Supply

Conversely, a sellers’ market exists when demand exceeds supply. There are many interested buyers for single-family homes and other real estate. However, since there isn’t enough inventory to go around, sellers have an advantage.

During a sellers’ market, homes sell faster. Also, buyers must compete with each other to purchase homes. This results in bidding wars, inflated sales prices due to over offering, and reduced seller concessions.

Under these circumstances, buyers are more compelled to pay a higher price to close a deal. They’ll spend more than they usually would when the market is in their favor. The number of days homes are on the market are lower compared to a buyer’s market, too.

In other words, during a sellers’ market, you can ask a higher list price for your home. This kind of market gives you more negotiating power as it relates to the value of your home.

Balanced Market: When Demand Meets Supply

If the current housing market has enough buyers for the inventory of available homes, then there is balance. The competition for homes is in step with the current housing inventory, creating moderate pricing, days on the market, and seller concessions.

Overall, if you have a shortage of either potential buyers or housing supply, then one party gains an advantage. Housing supply also trumps many factors. Consider this: in late 2023, even decreased demand due to high interest rates can’t bring home prices down to “crash” because of the ongoing low inventory.

Where Are We Now?

Between 2021-2022, a sellers’ market was in full swing. Though there is still a shortage of homes and elevated demand for homes, higher interest rates and reduced loan affordability has made it more difficult to buy a home, especially for first-time homebuyers.

As 2023 comes to a close, homes aren’t moving as quickly as they have in previous months, indicating that the market is shifting. If you’re interested in buying a home, it’s best to consult a real estate agent and speak with your lender to make a game plan.

Since housing prices are expected to stay flat or marginally increase, buyers should prepare a large down payment to make their mortgage interest rates as low as they can be. There are still good deals out there, especially if you look to new construction homes, which typically come with builder incentives like preferred lender rates and warranties.

Putting the Current Market in Perspective

Fortunately, the current real estate market isn’t at a standstill. All that’s needed to breathe life back into real estate sales is an uptick in inventory. Part of the current sales slump that exists is low inventory. Many homeowners are stuck in their homes because they can’t find a new one.

Many homeowners face a similar problem. If they all put their homes on the market, however, it will fix the inventory problem. They could find a home quickly in a market with a balanced pool of buyers and sellers. 

Is the Seller’s Market Over?

Theoretically, no. We are still riding the coattails of one of the best home sellers’ market in recent history. A chronically low supply of homes ensures that for the foreseeable future, sellers still have the upper hand to some degree. Home values are still high. The lower prices that many have been hoping for simply aren’t here. This plus increased interest rates are tempering buyer activity. With more buyers priced out, there is less competition, which balances the market more toward the buyer’s favor.

Buyer’s Market Vs. Seller’s Market

Hopefully, we’ve provided you with enough information to decide for yourself if this market serves your needs or not. If you would like to speak with an expert to see if this is the right time for you to buy or sell, contact us. Our team has helped countless clients buy and sell homes in different types of markets.

Sell Your Home the Easy Way

Think of Marketplace Homes as your team of dedicated real estate experts. We can help you prepare your listing and create a marketing plan. No matter what market we’re in, whether it’s a pandemic moving boom, the intense seller’s market of last year, or the cooling market of 2023, we’re ready and have the expertise to help.

We can also help you negotiate offers in the local real estate market to ensure that you get the most for your home. However, that’s not all we do.

We can also provide you with a backup cash offer. If you purchase a new construction home and your previous home doesn’t sell before it’s ready, we’ll buy your existing home. 

Also, if you are purchasing a new construction home, Marketplace Homes will help you save on fees. You’ll only pay a 4% listing fee. That’s 2% less than a traditional brokerage fee and will enable you to save thousands of dollars. So, if part of next year’s goals is to buy a new home, let’s start talking.

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