In Real Estate What is a Buyer’s Market?

Robin Hill Last Updated Sep 26, 2019 (0) comment

White Buyer's Market Sign representing In Real Estate What is a Buyer's Market

In Real Estate, a buyer’s market is when homebuyers have an advantage over sellers in price negotiations. This is also known as a cold real estate market.

The law of real estate supply and demand states that when there is a surplus of homes for sale, it puts downward pressure on home prices. Conversely, if there is more demand for homes than the market can supply, it puts upward pressure on home prices.

In a buyer’s market there are more homes for sale than buyers. If you are trying to sell your home in a buyer’s market, your home may stay on the market longer before securing a buyer. On the other hand, if you are trying to buy a home in a buyer’s market,  you have a wide assortment of available properties.

As a result, with fewer buyers, a homebuyer has a distinct advantage during price negotiations if the homeowner really wants to sell their home. This may translate to a lower listing price.   A home seller may make other allowances, such as paying the closing costs or installing new appliances to make their listing more attractive.

Real Estate Signs That It May Be a Buyer’s Market

• Increase in home construction as the demand for homes decline
• Home prices start to level off
• Economy stabilizes or declines a bit
• Stock market levels or becomes slightly unstable
• Homes are still on the market for more than six months
• Lower final selling prices than the seller’s original asking or listed price are reported
• Median sale prices are declining

How Long Do Buyer’s Markets Last?

According to the economist Homer Hoyt, the real estate market in the United States generally follows 18-year cycles. During this time, a buyer’s market only lasts two to three years within the cycle.
Of course, there is no concrete start and end date. So, it is not advisable to wait too long before signing a purchase agreement if the property is what you’re looking for.

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