A Buyer’s Market vs. A Seller’s Market
Nobody wants to overpay for their home. Similarly, no one wants to sell their current home for less than they can get. This is why it’s common to hear people talking about ‘buyer’s markets’ and ‘seller’s markets’.
These are really just a different way of talking about supply and demand.
When there are too many properties on the market and not enough buyers, it’s the sellers who have to compete with each other to entice buyers to choose them. And the best way to be competitive is to drop your price.
Too much supply equals a lower demand which means lower prices. Lower prices means it’s a buyer’s market, as the buyer has more power in the negotiation.
The flip side of the coin is when there are not enough properties to satisfy the demand for potential buyers. Now it’s the buyers who are competing with each other by raising their bids. The seller benefits as prices are driven up, so it’s a seller’s market.
Are You Buying, Selling, Or Both?
In much the same way that the mantra for stocks is ‘buy low sell high’, you would obviously prefer to buy your home in a buyer’s market and sell your home in a seller’s market.
If you’re purchasing your first home, you may have the ability to time the market with more flexibility. Unfortunately for buyers, identifying the type of market can be difficult. Even in the same city, different neighbourhoods can have different type of markets, and it will take some research to determine what kind of market your target neighbourhood is.
If you’re selling and not buying a new property, current demand levels can make you rich or wipe out all your hard work. As with anything else, a tight deadline can hurt you, and the more flexibility you are the better. Speak to your Real Estate agent about your options. In a very down market it may even make sense to rent your property for a year or two before it recovers and you can sell then.
If you’re just moving, it can be tough to get the best of both worlds. If it’s a seller’s market, you’ll obviously get a good price for the property you’re selling, but you’ll also pay more when you buy.
Can You Time The Market?
As with the stock market, there are people who make their living making predictions about real estate, but most of what they tell you won’t do you much good. While some markets maintain slow and steady periods of highs and lows, others are much more volatile, and timing your buy or sell will be very difficult.
Remember, the more flexibility you have, the more options you’ll have. Speak to multiple agents and other industry experts to receive the best information and advice and go from there.