Decoding the Lingo: Buyer’s Market, Seller’s Market

A “buyer’s market” favors individuals and companies that are buying real estate. This is caused by an excess of supply over demand. The “market” refers to a local real estate environment (a city, town, neighborhood).  This is not to say that state-wide and national factors don’t impact local markets, but it does mean that local factors (job markets, local economies, crime rates, education oportunities, etc) will almost always trump national factors.  So a “buyer’s market” implies that it is a good time to have access to money in order to purchase real estate.  The implications of a “buyer’s market” on buying and selling are foder for many future posts, but some signs would look familar to us right now.  Signs of a buyer’s market include higher than average for-sale inventory (homes actively for sale), a list-to-sell average dipping well below 100% (homes are consistantly being sold for less than the sellers are initially asking), and days-on-market averages (time a home has been for sale) rise beyond the three month mark (my own line in the sand). 

A “seller’s market” would be the oposite.  When inventories are low and demand is high.  When it is uncommon for property to be sold without a bidding war between multiple possible buyers, it is a strong seller market.  More commonly, a seller market looks like flat or decreasing inventory levels, prices increase, and appropriately-priced houses moving off the market quickly.