How Can You Tell if it's a Buyer's or Seller's Market?

Whether you're buying or selling your home, you'll definitely want to know what the climate of the current market is in your area. The temperature of the market will influence how you go about selling your home or putting in an offer on a new one. 

Generally speaking, housing markets can either be classified as buyer's or seller's markets. They can also fall under the "neutral" category, which neither favours buyers nor sellers. 

In a seller's market, sellers typically have the upper hand. In this type of market, there's more demand for housing and not as much inventory to go around. As such, sellers can usually sell for more money and can typically get their homes off their hands rather quickly.

In a buyer's market, there's far less demand for homes and sellers are working harder to make their properties stand out. In this case, buyers will usually have more to choose from and make be able to wheel and deal to get a lower price on a home.

The thing is, how can you tell the difference between a buyer's or seller's market? Or are you in a neutral market right now? Here are some ways to tell the difference.

Signs of a Buyer's Market

If you're on the buying end of a real estate transaction, the best time for you to enter the market is during a buyer's market. Here are some signs of this type of market:

  • Lots of inventory compared to previous months (usually more than 6 months' worth)

  • Comparable sale prices are high compared to current active listing prices

  • Fewer buyers purchasing homes

  • Lower number of closed sales

  • Decreasing median sale prices 

  • Lots of real estate ads

  • For Sale signs staying up longer

  • Longer DOM (days on the market)

Signs of a Seller's Market

If you're on the selling end of a real estate deal, you'll find it much easier and profitable to sell during a seller's market. But what does this look like? Here are some telltale signs:

  • Low inventory compared to previous months (usually less than 6 months' worth)

  • Comparable sale prices are low compared to current active listing prices

  • More buyers purchasing homes

  • Higher number of closed sales

  • Increasing median sale prices 

  • Fewer real estate ads 

  • For Sale signs not up for long

  • Shorter DOM (days on the market)

What About Neutral Markets?

A neutral real estate market doesn't favour buyers or sellers. That means the market is balanced. The market is even-keeled and is not in the midst of volatile swings as might be the case with buyer's and seller's markets. So, what are the signs of a neutral market?

  • Affordable interest rates

  • Equalized number of buyers and sellers

  • Neutral inventory compared to previous normal months (between 3 to 6 months' worth)

  • Comparable sale prices are close to current active listing prices

  • Stabilized number of sales 

  • Plateaued median sale prices 

  • Typical number of real estate ads

  • 30 to 45 days DOM

When Should You Sell?

While there may be ideal times to buy and sell, that doesn't necessarily mean you should wait for a specific market to make a move. If you do, you could be waiting forever for the perfect time. The truth is, the right time to buy or sell is any time, as long as you've teamed up with the right professionals who will either help you appropriately position your home for sale or negotiate on a new home purchase.

No matter which side of the coin you happen to be on right now, our real estate team can make things happen for you. Call us today!