Buyer's Market VS Seller's Market

We've all heard the phrases "It's a seller's market" or "The buyer is in control," but which is it? Who really determines the type of market we are in? CLICK HERE TO WATCH THE VIDEO

Every day, we see headlines about the housing market. Whether it’s about mortgage rates, housing prices, or inventory, it can be quite confusing to know who is in the driver’s seat. What data do real estate professionals analyze when assessing the market? It all comes down to the supply and demand of inventory.

Typically, when supply is low and buyer demand is high, it’s a seller’s market. Conversely, if there is an oversupply of listings, that indicates a buyer’s market, where demand has cooled, shifting control to the buyer. Real estate professionals often look at the absorption rate of a specific area. Generally, if there is less than a five-month supply of homes available, it’s a seller’s market. A five to seven-month supply indicates a balanced market, and anything more than a seven-month supply means it’s a buyer’s market. It's important to note that each neighborhood, city, and state will vary.

For example, in my area, if a home is on the market for longer than 14 days, it’s a sign that the home is probably priced too high. Although “experts” have their opinions, it’s crucial to consult a seasoned, experienced real estate expert to understand the local data.

Nationally, we have been in more of a seller’s market with lower inventory levels. According to Realtor.com economic research analyst Hannah Jones, “The market is still leaning toward a seller’s market but has gained balance since COVID when the market was red hot. The last true buyer’s market was in 2012 when housing inventory was a little over seven months, meaning it's been 12 years since supply outweighed demand.”

The market is not a slam dunk for sellers either. Most sellers hold a mortgage with a lower interest rate than today’s rate, meaning if they sell, they would be purchasing in a higher-priced market. So, although it is more favorable to be a seller in today's market, sellers, like buyers, face higher rates and home prices too. Experts say the market feels more like a “limbo market,” where both buyers and sellers feel conflicted about the overall economy. Regardless, keep house hunting as owning real estate is still the number one way to build your net worth over time.

This is Dave with The David Marshall Team of eXp Realty.

If you would like more information on the current inventory in your local area, home prices, and days on market, then please contact us for our client-based approach to service excellence.