How to Tell the Difference Between Buyer’s a and a Seller’s Market

Updated on 03/31/2023

How to Tell the Difference Between Buyer’s a and a Seller’s Market

Are you hearing terms like buyer or seller market but confused about what they mean and your housing situation? It is extremely valuable to figure out if it is a buyers or seller’s market currently and when the trend will change whether you are planning to sell or buy property. 

The housing market can greatly affect the value of properties. But are these market trends nationwide or local? Discover more about who determines the housing movements and what to look for in your area.

What is a Buyers Vs. Sellers Market?

Buyers vs sellers’ market upticks influence who has the advantage during home purchases. A seller marketplace means home sellers are likely to benefit, whereas a buyer marketplace indicates that prospective home buyers have better opportunities. 

In a sellers’ market, fewer houses are available for purchase than buyers. Sellers’ markets occur when an increased or high demand for homes of sale causes housing shortages. A high demand gives sellers the upper hand during negotiations since they can pick the highest buyer.

Typical signs of a seller marketplace include the following:

  • Home listings are higher than in the recent past, such as the year before
  • Listings do not last long as they sell quickly
  • Buyers experience bidding wars
  • The final purchase price is more than the initial listing price
  • More cash purchases

In a buyers’ market, demand for homes is lower because more real estate is available than interested buyers. Sellers must compete with other sellers and may need to lower the asking price or risk waiting a long time for another potential buyer. 

Common indications of a buyers’ market include the following:

  • Listings prices are lower than usual
  • Listings stay on the market for weeks to months 
  • Buyers make more contingencies
  • Sellers make more concessions and repairs
  • The final purchase price is less than the initial listing price

Although most of the nation is going through a housing shortage as of 2023, markets can vary by location. Some states and counties can experience a sellers’ market while their neighboring area is in a buyers’ market. You may look up if it is a buyer’s or seller’s market by ZIP code online or with your real estate agent.

Sellers in a Buyers Market vs Sellers Market

If you are a seller in a buyers’ market, you should find your property’s competitive edge. Research what similar nearby homes sold for in the last few months to a year, and check for what makes your home stand out. One-floor homes, convenient highway access, and fenced-in backyards are big selling points. 

You can also make your home more attractive to buyers by sprucing up the curb appeal, updating the interior paint, and staging your home. Neutral colors and clean spaces can help buyers imagine living in the home. 

Get an inspection before listing, so you can fix any minor issues. Fewer problems can mean fewer complaints and demands from homebuyers. It can also prepare you for concessions and a buyers’ credit for them to fix the concerns.

If you are a seller in a sellers’ market, you should make sure to list your home for a price that reflects the increased demand. Do your research and ask your real estate agent about comparable properties. Conversely, you could set the listing price lower to encourage a bidding war to drive up the price. You can also ask for concessions, such as the buyer paying all of the agents’ commission fees. 

Buyers in a Sellers Market vs Buyers Market

If you are a buyer in a sellers’ market, you may want to put a hold on buying a home. It can be a frustrating time for buyers who want to find the perfect home when listing close hours to days after opening. You will need to act quickly to get the home you want.  

Save time and show you are financially ready with a mortgage pre-approval. Many sellers want to close quickly with a buyer who has the funds to make the purchase. Unless you are buying the property with cash outright, a pre-approval letter demonstrates you can pay for a home.  

Bidding wars can drive up the purchase price, so make sure you stay within your budget. A higher cost could make you ineligible for your loan or cause financial stress trying to make the monthly payments. 

If you are a buyer in a buyers’ market, you may be able to get your new home for a steal. You can offer a lower price, ask for repairs, and negotiate concessions into the terms, such as the seller paying for closing costs. 

How Does the Market Change Between a Buyer or Seller Market

Supply and demand greatly impact whether it is a buyer’s or seller’s market right now, but other factors also influence the housing industry. The economy and mortgage rates can indicate how consumers will react and their feelings about buying and selling property. Experts and real estate agents keep an eye on these conditions to look for upcoming changes in the housing market.

  • Decreasing unemployment rates and a good economy promote consumers’ confidence, which allows real estate to become more active. Conversely, sales decrease in recessions when the unemployment rate increases when consumers are more concerned about finances. 
  • Cheap mortgage rates can entice individuals to take the plunge into homeownership. Low-interest rates may also change how much a borrower can afford to pay for a home. For example, a $1,000-monthly mortgage payment equals a $187,000 loan at 5 percent or a $210,000 mortgage at 4 percent.

The housing market in a specific location can change if a major corporation moves in and has hundreds of jobs available. Likewise, new attractions, highways, better schools and top-rated hospitals may alter the demand for housing in the surrounding area. 

The government can affect demand and prices by altering laws, regulations, and taxes. Tariffs on imported housing materials – like lumber, steel, and aluminum – can increase housing prices and the market. Tax breaks for new homeowners can incentivize prospective buyers.