The news is abuzz with the news that, after buying in a Seller’s market for the past two years or more, we’ve now entered a Buyer’s Market. “Ok” you think to yourself, “what does that mean, exactly?” At its simplest, a Buyer’s Market is exactly what it sounds like – a market that favours buyers. A Seller’s Market is just that – sellers have the advantage. How can you tell which one we’re in? And what does it mean to the housing market?
A Buyer’s Market is a surplus in housing, when there are more houses on the market than potential buyers, or in other words, the supply is greater than the demand. In a Buyer’s Market, buyers can acquire houses at a lower price.
In a Buyer’s Market, buyers typically spend longer looking at homes as there is less competition. As there is less competition, buyers are better able to negotiate price, usually at list price or below list price. Typically, a Buyer’s Market is when there is more than six months of inventory.
Overall, a Buyer’s Market is more favourable to buyers due to the less competition in the housing market.
On the other hand, a Seller’s Market is a shortage in the housing market with more potential buyers, or put simply, the demand is greater than supply. As there are less houses on the market than potential buyers, there is more competition, and sellers have more negotiating power. This increases the prices on homes and higher offers are offered by buyers.
A Seller’s Market causes a faster pace for the real estate transaction, meaning buyers have less time to look at homes. This gives the buyers less of a chance of doing due diligence on the home. Buyers could also be in a multiple offer scenario which could mean no conditions on offers. A Seller Market is when there is less than six months of inventory.
Overall, A Seller’s Market is more favorable to the seller as there is more competition, resulting in higher offers.
But wait? What’s a balanced market? A balanced market is exactly as it sounds; a balanced number of houses and potential buyers. In a Balanced Market, reasonable offers are made and prices remain stable.