Buyer’s and Seller’s Markets Impact Homes for Sale

Buyer’s Market

Simply put, a buyer’s market is a result of the economic principle of supply and demand. In this case, there are more properties in supply (i.e. for sale) than there is a demand for them, meaning that those looking to invest in real estate have a lot of options to choose from. Supply and demand fluctuate depending on how many new customers enter an area and how many homeowners in the region have decided to stay in their properties.

In these circumstances, there are plentiful homes for sale, which favors those interested in investing in residential property. The geographic region and price ranges are favorable and the cost to purchase is relatively low. If housing in an area tends to take more than six months to sell, then it is considered a buyer’s market. You can easily find how many days a property has been listed on various real estate sites.

Seller’s Market

In a seller’s market, it is harder to find homes for sale. The supply is low in comparison to the demand to purchase property. Prices are typically a little higher and houses don’t tend to stay listed for as long a period of time.

When this occurs, there are a limited number of options. Buyers will have less opportunity to negotiate-because sellers can entertain other offers-and as a result, will pay more than they would in a buyer’s market. Sellers can increase their prices and, as long as the homes appraise for the asking price, receive more than they otherwise could.

What Stimulates the Change

As with everything, housing properties will fluctuate between shortage and surplus. While there is no clear determination on how long the current stage will last, there are several factors that can impact the supply and demand of homes for sale in your area. Things like interest rates, consumer confidence, and economic conditions have a high impact. A growing regional economy coupled with low-interest rates and high confidence can lead more people to buy houses.