When is the best time to buy or sell a home? While certain seasons may be busier than others, the fluctuations within the real estate market have far more to do with the concept of supply and demand than they do with the time of year. That’s why it’s crucial to pay attention to the housing market and if your local area is experiencing a buyer’s market or a seller’s market.

What Is A Buyer’s Market?

A buyer’s market occurs when supply exceeds demand. To put it another way, real estate inventory is high, and there are plenty of homes for sale, but there’s a shortage of interested home buyers. These conditions give buyers leverage over sellers because when supply is higher and demand lower, the market is forced to respond.

What Happens In A Buyer’s Market?

In a buyer’s market, real estate prices decrease, and homes linger on the market longer. This means that sellers must compete with each other in order to attract potential buyers. Typically, sellers will drop their asking prices to gain an advantage in the market. Furthermore, they’re much more willing to negotiate offers to prevent buyers from walking away.

For buyers, buying a home in a buyer’s market is ideal – it allows buyers to have more choices in homes, meaning better all around deals. This increased bargaining power allows buyers to have both lower price points on homes as well as the potential for additional concessions from sellers.

What Is A Seller’s Market?

A seller’s market arises when demand exceeds supply. In other words, there are many interested buyers, but the real estate inventory is low. Since there are fewer homes available, sellers are at an advantage.

What Happens In A Seller’s Market?

In a seller’s market, homes sell faster, and buyers must compete with each other in order to score a property. These market conditions often make buyers willing to spend more on a home than they would otherwise, meaning that sellers can raise their asking prices. Furthermore, the increased interest means that buyers rarely have the power to negotiate and are more willing to accept properties as-is.

Due to this shortage of housing, these conditions often lead to bidding wars. During bidding wars, buyers will make competing offers and drive up the price, typically above what the seller initially asked for.