How Can You Tell If It’s A Buyer’s Or Seller’s Market?
Before you buy or sell, there are ways to determine if your local area is experiencing a buyer’s market or seller’s market. Here are some indicators that will help you.
Real Estate Inventory
Review the homes available on the market. The larger the inventory, the more likely it is that your local area is in the midst of a buyer’s market. Conversely, if there seem to be very few homes being listed, then it’s likely a seller’s market.
To get a precise read on the inventory, divide the number of homes currently on the market by the number of homes that have sold in the last month. If the result is above seven, it’s a buyer’s market. If it’s below five, it’s a seller’s market. Anything in between is considered a neutral market.
Recent Sales
Check the recent sales of properties comparable to your own or the one you’re interested in. Pay attention to homes with similar factors like age, size, region, neighborhood and number of bedrooms. If you find that homes generally have been selling above their asking price, it’s a good indication that you’re in a seller’s market. If they’ve been selling below their asking price, signs point to a buyer’s market.
Pricing
In a buyer’s market, sellers will often drop their asking prices. When looking at current listings, review the price history. If you see that the prices of a number of homes have been cut recently, you can assume that it’s a buyer’s market.
Be aware that sellers may have unrealistic expectations about their homes’ value, so make sure that what you’re noticing is a trend, not just a single occurrence.
Market Rates
You can also observe interest rates to determine if it is a buyer’s or seller’s market. Higher interest rates can cause people to back out of the real estate market, which benefits buyers. Lower mortgage rates allow an influx of buyers, signaling a seller’s market.
Time On Market
The number of days that a home is on the market is another strong indication of housing conditions. Homes sell faster in a seller’s market and take more time to go under contract in a buyer’s market.
Market Trends
Knowing if home prices across your area have been increasing or decreasing is the strongest indication of whether it’s a seller’s or buyer’s market. The easiest way to gauge if housing prices are rising or falling is to look at market trend reports.
Rocket HomesSM provides a free report of market conditions for anyone who creates an account. By searching the location you’re interested in, you’ll be given an option to see location trends.
