Whether you’re planning to sell your house or are on the market to buy one, knowing whether the local real estate market is a buyers’ or sellers’ market can help you plan how to go about selling or buying.
Real estate is local. Even the markets in neighborhoods within the same city can differ. Houses can be selling like hot cakes in one city while houses are languishing on the market in another city within the same state.
The markets can differ even in neighborhoods within the same city. Here’s how to tell whether it is a buyers’ or sellers’ market in your local housing market.
It is a buyers’ market when the number of homes listed for sale is more than the buyers looking to buy them. This kind of market characterized by more supply and less demand favors buyers. If you’re buying a house in this market, you will be able to negotiate a better deal. If you’re selling, you have to get creative to make your home stand out. You may even have to reduce the price to get your home to sell.
It is a sellers’ market when there are more buyers on the market than there are homes available for sale. Greater demand and less supply mean the power lies with the seller. This is the best time to sell a house and you’re likely to get multiple offers, which can lead to bidding wars that will push the asking price up. If you’re buying in this kind of market, you will have to look for ways to make your offer attractive and be prepared to pay more to get your dream home.
Determining the current status of a real estate market requires an analysis of current listings, recent sales and price data. You can get the data and analysis from an experienced local real estate agent. You can also get the data from online real estate websites such as Zillow and by driving around the neighborhood and then use the data to conduct your own analysis. Here is how to analyze the data and determine what kind of market it is:
The months of inventory on the market or the sales rate will tell you what kind of market you’re operating in. To calculate it, divide the number of homes currently listed for sale in your area by the average number of homes that sell in a month. This will tell you how many months it will take for all the current listings to sell. A sales rate of six months exactly indicates a balanced market that is good for both buyers and sellers.
Price trends will also help you gauge the health of the market. Have a look at the recently sold properties in your area, as these will give you an idea of the health of the market. How many listings have had to reduce their asking price recently?
Many sellers adjusting their asking price downwards and many properties selling below their initial listing price is an indicator that it is a buyers’ market. If the recently sold houses sold at or above their asking price, you’re looking at a sellers’ market.
Days on the market is another statistic that will help you tell whether it is a buyers’ or sellers’ market. It is the number of days listed houses are lasting on the market before selling. Homes move fast in a sellers’ market and tend to linger in a buyers’ market. If houses are selling like hot cakes and listings going from active to pending fast, it is a hot market. In a slow market, houses can languish on the market for months.
Other indicators of the current status of the market include job and population growth in the area and new or planned infrastructure development projects such as new roads and commercial buildings. Growing markets experiencing a boom in jobs and population growth and with plenty of development projects experience a sellers’ market.
When you selling or buying a house, it is vitally important to understand the current status of the market. Knowing whether the local market you’re operating in is a buyers’ or sellers’ market will enable you to devise the best strategy for success. Market cycles can change on a dime though. A buyer’s market can quickly turn into a seller’s market so it is important to keep monitoring the market.
Real Estate Market Trend Reports – Zillow.com
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