A shift from a buyer’s market to a seller’s market, or vice versa, is typically driven by changes in the supply and demand dynamics of the real estate market. Here’s an overview of what these terms mean:
Buyer’s Market:
– In a buyer’s market, there is a surplus of homes available for sale compared to the number of potential buyers.
– This surplus often leads to lower home prices, longer time on the market for sellers, and more negotiating power for buyers.
– Buyers have more options and may be able to negotiate better deals.
Seller’s Market:
– In a seller’s market, there are more buyers than available homes for sale.
– This scarcity of inventory can drive up home prices, shorten the time properties stay on the market, and give sellers more negotiating power.
– Buyers may face increased competition, and quick decision-making may be necessary to secure a property.
Several factors can contribute to a shift from a buyer’s market to a seller’s market:
Economic Conditions: Improvements in the economy, such as job growth and low unemployment rates, can increase demand for homes and shift the market in favor of sellers.
Interest Rates: Low-interest rates often attract more buyers to the market, potentially creating a seller’s market.
Housing Supply: Limited housing inventory, possibly due to new construction not keeping up with demand, can contribute to a seller’s market.
My opinion, with interest rates creeping up to 8% and even higher and with the seasonal slow down, we have transitioned to a buyer’s market over the last four months. Even through this slow down, prices have stayed fairly consistent. Now that we are pushing through the season of Christmas, and into the new year, we have seen interest rates take a dive. Due to these factors, I am starting to see an increase in buyers and an increase in buying demand. I feel, that as interest rates come down, this market is going to transition back into a seller’s market, meaning buyers will have to compete with each other to get into homes.
Let’s not forget what that means. Buyer’s are often willing to take huge chances to get into a home and that includes some of these scenarios:
- Waiving inspections.
- Buying “As is”, insuring the seller that the buyer will come in with no demands for repairs.
- Paying cash over appraisal values.
- Giving into seller’s conditions and or requests.
For young buyers that are unable to do some of these things, I would try to enter the market before the market takes a full swing to a seller’s advantage. That means possibly entering the market now, paying interest at a decent rate and at some point refinancing lower could be a solution. Identifying the market shift and trying to strike during the shift could be key!