Buyers Market vs. Sellers Market

The real estate housing market can be confusing, especially if you are a first-time home buyer or seller. When is a good time to buy? When is a good time to sell? Should you wait for the market to change? What does a buyer’s market mean? What about a seller’s market? How can you tell the difference? If all these questions are flying through your head, you are not alone. Understanding the terminology associated with the real estate industry alone can be a challenge, but we are here to help.  

The real estate industry is a delicate balance of supply and demand. When one is higher than the other, someone could be at a disadvantage in the home-selling process, but how do you know who has the upper hand?  

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What is a Seller’s Market? 

A seller’s market is a real estate market where demand is higher than supply or there are more people looking to buy homes than there are homes up for sale. In a seller’s market, sellers tend to have an advantage as multiple buyers compete for a limited number of properties. Buyers may end up in a bidding war and often do not have as much negotiating power.  

Some key characteristics of a seller’s market can include: 

• Low housing inventory  

• Higher sale prices 

• Less time on the market 

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What is a Buyer’s Market? 

A buyer’s market is a real estate market where demand is lower than supply or there are fewer people looking to buy a home versus the number of homes available for sale on the market. This type of market tends to favor buyers as sellers are forced to compete for interested buyers. As a result, sellers may need to make more compromises in order to get their houses sold.  

Some key characteristics of a buyer’s market can include: 

• More homes on the market 

• Lower sale prices 

• Longer time on the market  

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How to Determine A Buyer’s Market vs. Seller’s Market? 

The real estate market depends on a variety of factors such as the economy, season, location, and more. Because of all these factors, there are natural fluctuations. There can be drastic changes from year to year as well as sometimes even day to day. Different cities can also have vastly different trends, so trying to keep up can be overwhelming.  

While a lot is going on, there are some key differences between buyer’s and seller’s markets and ways to recognize which market you are currently in. Some important factors are: 

• Days on the Market – When homes are flying off the market in a few days, it is typically an indicator of a seller’s market. If homes sit on the market for several weeks or even months, it is often a sign of a buyer’s market. You can typically find the number of days on the market online.  

• Prices – If homes in your area are being sold for more than the asking price or the house price seems high, it is likely a seller’s market. In contrast, if homes are sold for less than their asking price or the house price was reduced, it is likely a buyer’s market. Look at the sale price of properties in your area as well as the price history to get a better understanding of how these numbers compare.  

• Number of Homes on the Market – Fewer homes on the market typically mean more competition among buyers and a seller’s market. On the other hand, if there is a surplus of homes available, it is usually a buyer’s market. Check to see how many listings there are in your area for a better idea of the number of homes on the market.