Buyer’s Market: What Is It And Are We In One?
As a home buyer, you want to find the best deal possible on your new home. And one of the biggest things you have to consider during your home search is whether you’re operating in a buyer’s market. If you’re purchasing a home in this type of market, you may have an advantage.
What Is A Buyer’s Market?
A buyer’s market is created by a surplus of homes for sale. That means the supply of housing has outgrown the number of those looking to purchase a house. Since there are more homes than buyers, buyers have more power to decide what they’re willing to negotiate with sellers.
Because of the high number of available homes, house prices tend to decrease in this type of market. Sellers are forced to compete for interested buyers and may be more willing to compromise on things like the asking price or closing costs.
When Will It Be A Buyer’s Market?
The housing market in the U.S. has strongly favored sellers since the beginning of the COVID-19 pandemic. A shortage of homes and a surplus of buyers led to fierce competition, bidding wars and high sales prices.
Mortgage interest rates have started to rise, and there is evidence that the market is beginning to cool. However, whether you’re in a buyer's or seller's market really depends on where you live.
For instance, in Manhattan and San Francisco, the supply of homes is increasing, and buyer demand is beginning to slow down. But Fayetteville, North Carolina; Akron, Ohio; and Winston-Salem, North Carolina, are the top three seller’s markets and are considered “seller strongholds.”
Buyer’s Market Vs. Seller’s Market: What’s The Difference?
In a seller’s market, there are more buyers for houses than homes for sale. That means the seller can ask for a higher price on the home and make fewer concessions during the negotiation process.
A seller’s market is the opposite of a buyer’s market. Home prices tend to drop during a buyer’s market but may increase during a seller’s market since there’s more competition for homes.
And buying a home can be risky during an extreme seller’s market since sellers are less willing to negotiate. In turn, buyers may be tempted to pay too much or purchase a home as is. Skipping the inspection isn’t a good idea because there could be serious problems with the house that you aren’t aware of.
How Can You Tell If It’s A Buyer’s Or Seller’s Market?
As a buyer, the best time to purchase a home is in a buyer’s market since you’ll have more power to negotiate on price. And you won’t have to waive contingencies or put yourself in a risky situation. But is it a buyer’s or seller’s market?
You can use certain key market indicators to determine whether it’s a buyer’s or seller’s market. If home prices are dropping, that’s a sign you could be entering a buyer’s market.
If real estate inventory is starting to rise, that’s another sign you may be in a buyer’s market. And it’s a good idea to watch how long houses stay on the market. If homes remain on the market for several weeks or months after being listed, that’s another indicator we’re in a buyer’s market.
Tips For Buyers And Sellers During A Buyer’s Market
Here are some strategies buyers and sellers can use during a buyer’s market.
Tips For Buyers
Here are some tips you can use as a buyer to find the right property and the best deal on your new home:
- Research your current housing market: Find out the trends in your local market. Working with a knowledgeable real estate agent can help with this.
- Familiarize yourself with comparable properties: If you’re interested in a particular home but think the seller’s asking price is too high, find out what similar properties are selling for. This information will help you determine a reasonable counteroffer.
- Don’t rush to make a purchase: You don’t have to rush to put in an offer in a buyer’s market. Wait until you find the right home at a price that works for your budget.
Tips For Sellers
Selling a home in a buyer’s market is more challenging, but there are some ways you can get the best price for your home:
- Use a real estate agent: Working with a real estate agent is always advised, but it’s essential when selling your home in a buyer’s market. A real estate agent will know how to market the house properly.
- Price the home competitively: If you ask too much, your house could sit on the market for months. Price the home as competitively as possible to increase the likelihood of receiving an offer quickly.
- Make any necessary improvements: Buyers will not be as willing to overlook problems with a home in a buyer’s market. Making those necessary repairs or renovations will go a long way toward boosting the home’s value.
The Bottom Line: It’s Important To Know When We’re In A Buyer’s Market
The type of market you’re buying in can significantly impact how much you pay for your home. A buyer’s market is the ideal time to buy a house since it gives you the most room to negotiate on price.
It’s important to do your research before getting started and work with a real estate agent who’s knowledgeable about the market. If you’re ready to begin the home buying process, you can get started by filling out an online application.
Apply for a mortgage today!