Most homebuyers don’t think about the status of the market when they decide to buy or sell a property because they are more focused on where they plan to live. However, it’s definitely a good thing to keep in mind because it can help you determine how to move forward.
If a buyer is looking to purchase a home, an ideal situation would be one where there are more homes available than buyers to purchase them. This is considered a buyer’s market. The buyer has more options to choose from and increases the odds of locating the perfect home. Serious sellers are usually willing to negotiate with buyers in this type of market. The buyer may even be able to purchase a home below its list price, and the seller may offer to pay some (or all) of the closing costs.
Characteristics of a Buyer’s Market: high inventory compared to previous months and/or years, more than six months of inventory available, real estate ads growing in size, For Sale signs staying up for longer periods of time, median sales prices declining
How to Compute Months of Inventory:
# of active listings in the past 30 days / # of sold or closed transactions in the past 30 days
For example, if there were 4,200 active listings in the past 30 days and only 600 sold or closed transactions, the months of inventory would be 7.
If a homeowner is hoping to sell their home, an ideal situation would be one where more buyers want to purchase a home than the number of properties available to buy. This is considered a seller’s market. Sellers are likely to sell their home much more quickly, and often, they sell it for more than the listing price.
Characteristics of a Seller’s Market: low inventory compared to previous months and/or years, less than six months of inventory available, unwavering sales numbers, flat median sales prices, advertising remains unchanged, Pending or Sold signs frequently displayed