“The most common (and incorrect) assumption about a buyer’s market is that you are going to get an incredible deal on a house and get a sale price much less than for what it’s listed”
It’s a term we know you’ve heard before: buyer’s market. You’ve probably heard of a seller’s market, too, but since we have been living in the former, let’s dig into that.
How do you define a buyer’s market? Typically, a balanced market in real estate is one where there is about three months of inventory. That is, if nothing new came on the market and the number of sales remained the same, there would be no more homes on the market in three months’ time.
A seller’s market is when there is less than three months of inventory and a buyer’s market is when we start to have more than three months of inventory.
The most common (and incorrect) assumption about a buyer’s market is that you are going to get an incredible deal on a house and get a sale price much less than for what it’s listed. The reason this is typically incorrect is because sellers are generally being advised by agents who know the market and they are pricing their homes accordingly.
If sellers maintained the same price point as when the market was “better” then, sure, you might get it for way under list price, but sellers don’t want to wait forever to sell so they price accordingly.
Keep in mind if you are selling and buying in the same market, it’s all relative. You might be selling your home for lower than what you expected but you are likely buying the new home at a price point lower than what it would be in a better market.
Another common misconception is that there is a lot from which to choose. This makes sense considering that a buyer’s market is defined as having a greater amount of inventory; however, it can vary in different segments of the market.
For example, right now we have a ton of apartment-style condos on the market so there is a lot from which to choose there, but if you look just at townhouse-style condos, there is a lot less inventory and it’s closer to a balanced market. There may be many more single-family homes for sale in one price range and very few in another. And some sections of the market, like high-end homes, tend to lean toward a buyer’s market all of the time.
Being well educated by a real estate professional will help you navigate any market in which you find yourself, and when they’re good at what they do, they’ll help you create realistic expectations and set you up for success.
Michelle Carre is a real estate professional with The Carre Group