How to recognize what market you're in
So, what type of market are you currently in? That depends on a number of things, including how many homes are for sale in your area, the number of people looking to buy, home prices, and more.
Here's what the general conditions look like under each market.
In buyer's markets:
- There are lots of listings and homes for sale
- Few people are looking to buy a house
- Sellers are more willing to negotiate
- Home prices have dropped or are dropping
In seller's markets:
- Inventory is low and listings are scarce
- There's lots of buyer demand and competition
- List prices are rising
- Bidding wars and multiple-offer scenarios are increasing
Buyer's markets: What they mean for buyers and sellers
If you're in a buyer's market, supply outweighs demand. There are more listings available than there are buyers, and sellers need to work harder to market and offload their homes.
As a buyer, that's a good thing. You'll probably have your pick of listings, and you might be able to negotiate more as well. You won't come up against many bidding wars, either, so you could see a faster, smoother transaction on the whole.
As a seller, conditions aren't great. Selling in a buyer's market will probably take a little longer, and you might not get the price you're hoping for in the end. You'll need to be willing to negotiate, get creative with your marketing, and maybe even throw in some concessions (like the cost of repairs or new appliances) to motivate the few potential buyers who are out there.
Seller's markets: What they mean for buyers and sellers
If you're in a seller's market, then demand outranks supply. There are more buyers on the market than there are listings, and buyers see tough competition for the few homes that are available.
As a buyer, this isn't the ideal market. You will probably come up against other offers and may find yourself in a bidding war (or several). You also may need to up your offer, waive contingencies, or make other moves to ensure your bids are attractive to sellers. Overall, it may take you longer to find a home that fits within your price range.
As a seller, this is the prime time to sell a home. You might be able to increase your listing price a bit. And as long as your home is in good condition, you can pretty much have your pick of buyers. You can also expect your property to sell fast, and you may be able to avoid some hassles in the process. Waived inspections and all-cash offers are more common in seller's markets.
The bottom line
Whether you're buying a home, selling one, or just thinking about a future investment, it's important to know what type of market you're in before making any moves. If you're not sure what your market conditions look like, speak to a local real estate agent for insights. They may also be able to help you strategize as you get further into the transaction.