Buyers' or Sellers' Market?
Q - I often hear the terms buyers' market and sellers' market. What do these terms mean?
A - Market conditions change over time and it is important for buyers and sellers to be aware of the market conditions when they are either buying or selling real estate.
Let me begin with a balanced market. This means that the demand for homes is about equal to the supply of homes. Put another way, the number of homes on the market is approximately equal to the number of buyers. In such a market, homes sell within a reasonable time. Depending on the area, this could be somewhere between 30 to 60 days. Buyers have a reasonable number of homes to choose from. In these circumstances, prices are stable and sellers tend to accept reasonable offers.
A buyers' market means that there are far more homes on the market than there are buyers - supply exceeds demand. In such a market, this increased availability of homes compared to the number of buyers translates into longer selling period. Homes stay on the market longer and prices tend to drop. This enables buyers to take their time in searching for a property. It also gives buyers more negotiating power.
A sellers' market means that there are more buyers looking for homes than there are homes -- demand exceeds supply. In this kind of market, homes sell quickly -- sometimes it may only take a few days and the selling period can be as short as a few hours. Buyers have to make quick decisions or they may loose that particular home. Also, buyers may have to pay above the listed price if there are others interested in the same property. Sellers might choose to only accept offers without any conditions.
Being aware of market conditions helps sellers and buyers with their buying or selling strategies.