If you’ve paid any attention at all to real estate news lately, you’ve surely heard someone use the term “seller’s market.” But what is a seller’s market versus a buyer’s market? What are the characteristics of each? And what does a shift mean for buyers and sellers? Let’s take a look in terms of the Roanoke Valley.
What is a seller’s market?
First, it’s important to realize that the term’s “buyer’s market” and “seller’s market” can refer to virtually any product or service. These aren’t just real estate terms.
In general, a seller’s market is a situation in which the supply of goods or services is less than the demand for the goods or services. When this happens, sellers are often able to get higher prices for the same goods and services or to sell the existing supply faster than usual.
An example of a seller’s market? The bread aisle when the weather forecast includes snow. Prices don’t rise, necessarily, but suddenly, the demand for bread is far higher than the supply. The supply of bread sells quickly, and buyers are willing to pay more. For example, if the bread you usually buy isn’t available, you’ll likely purchase a more expensive brand if that’s all that’s available.
In terms of real estate, a seller’s market means the number of homes available in a market is less than the demand for homes. This is when you’ll hear your Realtor say, “Inventory is low.” You’ll see prices hold firm or escalate. Homes that are well-located and in good shape usually will spend less time on the market and will often receive multiple offers. Homes that have a problem or two have a better chance of selling, because there’s less competition on the market and buyers are more likely to compromise instead of being left empty-handed.
What is a buyer’s market?
In a buyer’s market, the supply of goods or services is more than the demand for those goods or services. One of the most obvious indicators is low prices, or at least lower prices than usual.
Let’s go back to the snow scenario. Say the snow doesn’t come, and it’s late in the season. You might just see snow melt and other such items on sale next week, because stores don’t want to be stuck with stockrooms full of winter items during warm weather. As a buyer, you have leverage, because the seller is motivated by the desire to move inventory.
Buyers’ markets happen in real estate, too. Inventory is high — we’ve got lots and lots of homes on the market — but buyer demand is less. The best homes often still sell reasonably quickly, but others spend longer on the market and see less activity. With more power to negotiate, buyers start looking more carefully at home inspections and sale prices of comparable properties.
Are we in a seller’s market?
We’ve been in a transition market for a long time. Inventory levels and prices have had short trends but have fluctuated, and good deals have been available on both sides.
We’ve moved more toward a seller’s market, particularly in some pricing tiers, but we’re still transitioning. We’ve got lots and lots of buyers: Young buyers, buyers upsizing and downsizing, and buyers who have seen significant gains in equity and are finally making moves that they’d been putting off. The winter slowdown that we typically see wasn’t as pronounced, because for the most part, buyers didn’t stop looking.
As a result, inventory levels are lower than usual, especially at lower and middle tiers of the market.
But here’s why buyers should be encouraged and stay in the market, especially if they have a little time and are persistent: The good inventory that is on the market continues to be replaced by good inventory. Will you pay a little more? It’s possible. But good deals are out there, if you’re working with an experienced agent who knows the listings, the neighborhoods and the market.
Whether you’re buying or selling, I’d love to talk about how we can make the Roanoke real estate market work for you. Contact me anytime at (540) 354-6323 or firstname.lastname@example.org. You can also check out my listings here and like my Facebook page.