Understanding Market Conditions
When you begin looking for a home, understanding the current environment will help guide you in setting realistic expectations.
In a buyer's market, the number of homes offered for sale is higher than the number of people looking to purchase the type of property offered.
In this environment, there is a high inventory of homes and homes remain on the market longer. Prices tend to decline. Buyers have many options and feel they have more time to review properties. Buyers feel they have more negotiating power during a sale. Well priced homes will still sell. Sellers can expect more conditions on offers, renegotiations regarding inspection issues and higher buyer expectations.
In a seller's market, the number of homes offered for sale is less than the number of people looking to purchase the type of property offered.
In this environment there is a small inventory of homes and houses remain on the market a short time. Many buyers may be pursuing the same property. Prices usually increase in this market and sellers feel they have more negotiating power during a sale. There may be multiple offers on properties. Overpriced homes will not get the attention that market priced homes receive. Buyers have less options in this market and may feel pressure to act quickly and to propose less conditions on offers.
In a balanced market, the number of homes on the market is relatively equal to the number of people looking to purchase the property offered.
In a balanced environment houses sell within a reasonable amount of time and prices remain relatively stable. Price fluctuations between properties may be more to do with buyer/seller motivation than a market adjustment. Buyers have many options but well priced homes will always attract interest. Equal negotiating power exists between buyers and sellers.