The market never sleeps… it’s constantly changing!
The real estate market is and always will be adjusting, and getting affected by new variables in the world!
Two terms that can help define the status of the real estate market: buyer’s market and seller’s market. Buyers have the advantage in a buyer’s market and sellers have the advantage in a seller’s market. A balanced market (in between a buyer’s market and seller’s market) has about 5 months of inventory, meaning if no other properties are listed, they will all be sold within 5 months. When there is more than 5 months of inventory it is a buyer’s market and when there is less than 5 months of inventory it is a seller’s market.
Some factors that can cause the market to adjust: interest rates, inflation, employment rate, supply and demand.
Every market has its advantages and disadvantages. In any market, three things need to align for a buyer and seller to have an agreement: location, condition, and price. Gains or losses due to the market can be equalized when you are both buying and selling in the same market.
Buyer’s Market: A pricing war and beauty contest!
In a buyer’s market, there is a surplus of properties for sale. These conditions can be in favor of those looking to purchase real estate. Property values tend to be lower, with motivated sellers eager to get their properties sold. As inventory increases, there is downward pressure on the sale prices, especially properties in lesser condition.
It can be great to buy when others are not! An advantage of buying during a buyer’s market is less competition, which creates more opportunity and leverage when negotiating the purchase price and extras, like repairs and upgrades to the property – even seller contributions towards your closing costs. Properties in a buyer’s market tend to stay on the market longer and require more endurance from sellers for the buyer to enter the market.
Seller’s Market: Strategy and speed create winners!
A seller’s market is the opposite, where the market is perceived as being in favor of the seller. Depending on how strong of a seller’s market that we are in, properties could sell quickly and above the list price. In this type of market there could be one or tens of offers on a property. Sellers can have more control during these markets and have the opportunity to maximize their property value. When a property sells for well above the list price, the buyer did not necessarily overpay. The list price can be an arbitrary number, it is not necessarily market value; the market value is how much a buyer is willing to pay.
Buying and Selling in any market
There are strategies to have successful transactions in any market! There are more factors to consider than just the market conditions too! Hiring an experienced and strategic real estate agent is critical. If you are looking for insight on today’s market market or have a question about anything real estate, reach out to the Dzurik Property Twins anytime!