In the world of real estate, one of the first questions that your agent will ask is, "are you looking to buy or sell, and at what time?'' Although this question may seem simple and overwhelming obvious, it is one of the most important components throughout the entire process. Over the past 240 years, real estate has been a major component of the United States economy. The Real Estate Market is best defined as the exchange of land along with all of its buildings, homes, crops, and natural minerals. Each market is different from city to city and can vary depending upon jobs in the area, resources, size, property type, demand, etc. For example, homes in San Francisco, California, will naturally be more expensive than homes in Boise, Idaho, due to the overall demand to live in the area. This is one of the many things that make real estate unique when compared to other investment opportunities. With this being said, is there a better time to buy or sell a home, or is it all the same? In this article, we will be discussing the similarities and differences between a buyer's market and a seller's market and which one is right for you.
Buyers Market
In a Buyer's Market, there are usually more homes for sale than potential buyers. Naturally, when this happens, the financial principle of supply and demand comes into effect, and the prices of homes begin to drop as the supply increases. A similar way to look at how a buyer's market compares to your everyday life is when you go to the grocery store to buy milk. If the store has too much milk in stock than potential customers, it will be put on sale and sold at a cheaper price. This is due to the supply and demand that has taken effect. In a buyers market, the person looking to purchase a home will generally have more of an advantage than a person selling. This can mean better prices, more options, and less competition from other buyers wanting to purchase the same property.
Sellers Market
In a Seller's Market, there are usually more buyers than homes for sale. This also plays into the principle of supply and demand. When more people are looking to buy a home than there are for sale, the price will increase. Another way to look at this during the holidays would be the new PS5 that came out at the end of November. The price is higher due to the large demand to purchase along with the limited supply. The same idea is present in real estate as well. When buyers are looking to purchase a new home with a limited supply, the seller will usually have more of an advantage. In some instances, there could be 4 or 5 buyers looking to purchase one home. More competition leads to a higher sales price, which in turn equates to more profit for the seller.
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