Buyer’s Market vs. Seller’s Market – What does it all mean?

Is it a Buyer’s Market or a Seller’s Market?

Even if you’re new to the home buying scene, you’ve probably heard of the term seller’s market or buyer’s market. It’s important to realize the difference so you’re prepared when you find that perfect home for you, or get ready to sell yours.

So, what are the differences?

When there is a surplus of inventory, meaning when there are more listings that there are buyers, you are in a buyer’s market. You’ll find that prices tend to rise much slower in a buyer’s market. On the other hand, when the amount of buyers far exceed the number of available listings, a seller’s market goes into effect. You’ll also find that homes sell much quicker during a seller’s market. A balanced market occurs when conditions do not necessarily favor the buyer or seller; supply and demand are fairly equal and prices stabilize.

Absorption rate is calculated by dividing the total amount of available homes by the total number of home sales for the month.

Monthly housing supply refers to how many months that it would take to sell all of the current amount of property, given the current absorption rate. Generally speaking, less than 3 months of inventory indicates a seller’s market and more than 6 months of inventory indicates a buyer’s market. 3 to 6 months is a balanced market.

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