How to Determine a Buyer’s Market

How to Determine a Buyer’s Market


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determine a buyer's market

The real estate market is cyclical. When you want to list your house on the market or are looking to purchase one, it is important to do some research to understand what kind of real estate market you will be playing in. It will help you determine whether the timing is right to sell or buy a house and how to go about it for the best outcome. So how do you determine a buyer’s market?

The text book definition is easy. It is a buyer’s market when the supply (available homes for sale) exceeds demand (the number of potential buyers looking to purchase homes). Determining whether your local housing market is currently a buyers’ market requires a thorough assessment of current listings and recent history. If you notice the following signs and statistics as you study listings and recent sales history, know that your current local real estate market is a buyers’ market.

Telltale Signs It’s a Buyer’s Market

Higher Months of Inventory/Lower absorption rates

If the months of inventory in your local housing market is more than 6 months, this is the first sign that you’re in a buyer’s market. Months of inventory refers to how many months it takes to sell all the current listings in the market at the current selling rate. A buyers’ market is characterized by a high inventory of houses available for sale and low demand for houses. This means that the absorption rate is low and the months of inventory higher.

Increased Days on Market (DOM)

A buyer’s market is accompanied by increasing days on the market. Days on the market refers to the number of days a single listing stays on the market before it is sold. In a buyer’s market, more houses available for sale and low demand by house buyers means that a listing lingers on the market longer.  days on the market are a sure indication that it is a buyer’s market. 

Price cuts

If you notice that many listings are selling at prices lower than the asking price and many homes having at least one price drop before selling, you’re looking at a real estate buyer’s market. When supply exceeds demand, prices go down. Sellers have to adapt by engaging in price wars to get their listings sold or accepting offers below their original prices.

Sellers Offering Incentives

When you see plenty of listings where sellers are offering incentives such as offering to pay the closing costs or the maintenance for a while, you’re probably in the midst of a buyers’ market. A high inventory of houses for sale coupled with low demand for houses means that sellers have to resort to either lowering their asking price or making concessions to make their properties more attractive to buyers.      

How to Determine a Buyer’s Market Overview

To determine a buyer’s market, monitor listings and recent sales history and keep an eye on the inventory levels, number of days on the market, pricing history, available inventory and absorption rates, which are the key indicators of the health of the market. A buyer’s market is the ideal housing cycle for buying a house. If you’re looking to sell in a buyer’s market, your best chances are to offer a house in pristine condition and price it attractively.

Resources:

What is a Buyer’s vs. Seller’s Market? – Redfin.com

Need to sell a house in the NYC area fast or as is? Master Realty Solutions Buys Houses in All Conditions in Long Island, Brooklyn, Bronx, and Queens. Want to learn more about the cash home buying process? Please give me a call at 718-993-3303 or email info@MasterRealtySolutions.com

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