Learning About a Buyer’s Market

Depending on where you live, homes may be better at selling or better for buying. In other words, it will be a seller’s market or a buyer’s market, although, at times it may actually be both. There is certain criterion that contributes to an area being called a buyer’s market.

In an average real estate market, real estate agents expect a home to sit on the market for approximately six months before it sells. Of course, some homes may sell much sooner whereas other homes may take longer but this is the average expected time. The real estate agents document the DOM (days on the market) of every home they currently have listed as well as those listed in the past and when they’ve sold. With this average of six months in mind, an MLS (multiple listing services) can easily be sitting on an inventory of homes for sale for six months. If these homes begin to sell slower and they’re sitting on the market for more than six months, the market is described as a buyer’s market. A seller’s market is when they sell before the six month average.

When there’s a buyer’s market in place, it means there are not enough buyers for the number of homes on the market. When this happens, it takes longer to sell the homes and, consequently, the prices and values of the homes decreases. Obviously, this is good for those looking for a home to buy but not good for those trying to sell their homes.

Buyer’s markets often seem to occur in the winter months mostly because people don’t really wish to move in the colder months. However, there may be less people buying homes in the winter but there are also fewer homes on the market during this time so it almost balances itself. Homes during these quieter times are often advertised more heavily and occasionally are sold for a higher price than they would sell during a busy marketing time.

Buyer’s market occurs most often in the spring or summer months. Families with children, which make up the largest buying group, will choose to buy homes during this time so they can do their moving during the summer vacation. With so many families choosing to move during the summer, the DOM may be longer and a there may become more homes than buyers, resulting in lower prices and a buyer’s market.

Although buyer’s markets generally don’t last a real long time, there are certain circumstances that can make them last a long time. A large factory shutting down in a town may be one cause. An earthquake, flood, tornado or other natural disaster may also bring on a buyer’s market. Inflation and a poor economy are usually the most common cause of a buyer’s market.

Buyer’s looking for a home to buy during a buyer’s market often seem to have the upper hand. Often things that might not ordinarily be included in the sale will suddenly be thrown in just to make the sale. Sellers may also offer owner-financing, help with closing costs or provide other special incentives to get buyers.

A buyer’s market may not necessarily hurt the seller that has taken good care of their home through the years with regular maintenance and, therefore, has extra equity in the home. They may still be able to sell their home for its value whereas a home that has had little maintenance done through the years will be the first one whose price drops.

If there’s one thing about the buyer’s market it’s that it will never last. It can change in a day’s time in the same way as a seller’s market can change.