So what is a Buyer's Market vs a Seller's Market? We use these terms all the time in Real Estate and I have found there are still people who don't really understand the difference. I want to try and explain the difference and how to use these Markets to make the best decision you can. I am using a monthly chart that shows how the Loudoun County Market has done in January of 2018.
Here is a definition of the two terms you can find on Google:
"A buyer's market is a situation in which supply exceeds demand, giving purchasers an advantage over sellers in price negotiations. ... The opposite of a buyer's market is a seller's market, a situation in which demand exceeds supply and owners have an advantage over buyers in price negotiations."
First of all there are a lot of buyers out looking right now but inventory of homes is very low. There is a demand for homes but depending on factors such as Interest Rates, the economy and so many others, this can change where it can become a Buyer's Market. In many markets the price range can affect whether it is a "Buyer's Market" or a "Seller's Market". I will be explaining this below.
On the chart below, find the $201-$400 price range where 108 TH went under Contract and only 42 Active. MORE Buyers and LESS Inventory = Seller's Market. Now you may say "Well won't more homes go on the market in February?" The rule of thumb is we need an avg. of 3 months of supply of inventory to be in what some call a "Normal Market" (What ever that is!) So we would need 324 homes (108 x 3 = 324) go on the market in February just in that price range to be a normal market. I don't believe in February that is likely but who knows during the Spring Season.
Now look at $1Mil+ price range. 16 SF homes went under Contract and there are 115 SF homes Active. So 16 x 3=48 this is a Buyer's Market. LESS Buyers and MORE Inventory = Buyer's Market. This is not that uncommon in this price range because there is a smaller percentage of the Buyers who are looking for homes. But for explanation purposes it fits.
Is it possible to have something in the middle? There is a time we can have what some like to call a "Normal Market"? Now look at $601-$800 price range Single Family (SF). There are 88 SF homes went under Contract in January under that price range. There are 257 Actives same price range so (88 X 3= 264) . Hopefully we will have at least 7 SF (264-257=7) go on the market in February. This probably would be considered a Normal market but there are still many factors in play like- how long have the homes been on the market, and of course it is a slower time of year as well as what is going to happen to Interest Rates.
One bright note to this confusion.... Right now, if you are Selling a home in the $401-$600 price range (Seller's Market) and Buying a new home in the price range above $601 (Buyer's Market/Normal) you could be in the best of both worlds.
We are just starting the 2018 Housing Market and things change monthly. If you want to look at your situation feel free to contact me I will give you specific information to help you make a decision that is right for you! I hope this helps!
