If you have been around real estate at all, you have likely heard the terms buyer's market and seller's market. Lately I hear it even more and often by discouraged buyers wondering if they should buy in a seller's market or wait for it to become a buyer's market. It is important to understand what these terms really mean to determine what action to take as a buyer or seller. I personally believe that it will come down to personal pros and cons of each market and not simply buying in a buyer's market and selling in a seller's market.Verify my mortgage eligibility (Feb 29th, 2024)
Simply put, the type of market is determined significantly by inventory and days on the market. A seller's market has more buyers and less seller's, therefor sellers get the advantage of being less flexible in negotiations. In a buyer's market, there are more sellers than buyers so a buyer has more houses to choose from and if a seller wants to sell their home, they may be more inclined to negotiate. It can be summed up as supply and demand, think back to Economics 101.
Currently we are still seeing record low inventory compared to the number of qualified buyers. During a sellers' market there is not enough desirable inventory to satisfy the pool of buyers, or demand of qualified buyers. Signs of this are increasing home prices, multiple offers, sellers not accepting below asking price or giving buyers closing costs credits. You can have a seller's market in geographic locations, housing sizes, neighborhoods etc. Currently nationwide we see evidence of a seller's market, especially in entry level homes and family homes. If you are a buyer hoping to get a below list price deal, seller closing cost credit, or all the repairs a home needs this may not be your market. Additionally, if you are not fully pre-approved with fully documented financing or need special financing your offer will not be viewed as strong as other offers in a seller's market. Working closely with a quality Mortgage Advisor is key to preparing to shop and make offers in this market. One who can ensure that your financing is as strong as your potentially offer.
Real Estate is difficult to speculate, but there are many trends that can be observed to evaluate likely outcomes. People are wondering if and or when this current seller's market is going to be over. Currently analysts in major markets are still seeing over 50% of the houses on the market selling for over asking price and typically in less than 15 days with multiple offers. We are seeing very much of this same thing here in Tehachapi. Our inventory of desirable homes is still significantly less than the number of qualified buyers looking to purchase.
It is typically as we near late fall and the holidays for things to slow down a bit. Many people choose not to move during these months due to weather, holidays and additional lack of inventory for their new purchase. Does that mean it will become a buyer's market? Not likely, with record numbers of first-time buyers still waiting to enter the market, a shortage of homes nationwide and record low interest rates still we are likely to see this seller's market for a while to come. If only we had a crystal ball…Show me today's rates (Feb 29th, 2024)