Sellers market, buyers market… what are they? How can you tell which one it is? Are there benefits to it being one or the other?
If you were to follow what’s happening to real estate listings and transactions in the lower mainland right now, you would definitely see that we are currently seeing a buyers market emerge.
What is a sellers market?
If I were to boil things down to the simplest explanation of a sellers market, it would be this: There are more buyers looking for homes then sellers selling their homes. Seems pretty straight forward right?! If there are less homes on the market and more buyers looking, the seller has a significant advantage because the buyers will be competing against one another for the same home, pushing prices up for the seller to make more money. The seller in this case would probably sell rather quickly, and usually at or over asking price (this was the case for many years here in Metro Vancouver).
There are many factors that can contribute to creating a sellers market as well! Things like population growth, job creation, or not enough homes being built (lack of development) can contribute to a market that favours the sellers.
If you’re still unsure if what you’re seeing represents a sellers or buyers market, you can look at recent statistics to give you a more clear picture. You can look at average days on the market (in a sellers market, this will be SHORT!), or ask price/list price vs. sold price. In a sellers market you would see the sold price at or higher than list price typically.
If you look at the current data coming out of our local area (surrounding Vancouver), you will see that the trend has shifted from a strong sellers market to more of a buyers market!
What is a buyers market?
A buyer’s market is basically the exact opposite of the sellers market. In a buyers market, there will be more supply than demand which pushes prices in the opposite direction (lower). The buyer than has an advantage over the seller since there is more competition in THEIR favour. As homes sit on the market longer with less strong offers on the table, sellers begin to consider lowering their asking prices to compete with other listings and comparables. We are seeing this right now in our local market. Houses that would have sold for tens if not hundreds of thousands over asking price with few or no subjects in a short amount of time are now sitting on the market and dropping in price, quite drastically too.
Tighter mortgage rules have also negatively impacted sellers because fewer people and families are qualifying for homes. Buying power has decreased with each new rule change which makes the pool of buyers even smaller!
Slowly, bidding wars and no subject offers are becoming a thing of the past already – but time will tell how long this lasts before another market shift. Of course if you are looking for a home that many other people want, for example entry level home with a suite, and more affordable condo close to amenities, and special properties like lofts, there are still fewer supply than demand. Even in Vancouver, many of my clients still find themselves in “sellers’ markets” for the properties they seek.
If you are in the market for a new home, make sure that you are aware of what you qualify for and what your purchasing power really is. A buyers market certainly signals a good time to be looking to buy, but let me help you make sure you have the right price range in place to start your home search.
Lets chat and see how you can take advantage of this new market cycle we are seeing!