Just as the stock market is cyclic, so is the housing market. When buying or selling a home, try to ascertain what kind of market you will enter. A real estate or mortgage sales agent can help you. Reality dictates that you may very likely be buying in a seller’s market or selling in a buyer’s market.

Ideally, if you are selling a property, you may have an easier time in a seller’s market. Optimally, if buying a home, a buyer’s market is preferred.

What influences the Real Estate Market? Interest rates are a vital factor. Additionally, economic conditions and the confidence of consumers, if positive, can help persuade people to buy — creating a potential shortage of homes and rising home prices. If these combined factors seem riskier, a surplus of homes may be available on the market, perhaps at reduced prices. Currently, the interest rates are very low due to the ongoing Covid-19 pandemic.

Supply and demand dictate a housing shortage or surplus. If there is a surplus of homes, a market conducive to buying becomes evident. If there are more potential buyers than homes available to buy, a shortage of housing occurs.

The market is in equilibrium when it is balanced by an equal number of buyers looking for a home as there are homes on the market.

Snapshot of a Seller’s Market

• The number of buyers exceeds the number of available homes
• The interest rates are low, making mortgage payments easier for those with a good income
• Homes are rapidly bought when placed for sale
• Sellers experience more negotiating clout when multiple offers on a home occur
• Rejection of conditional offers arise more often
• Increasing demand pushes home prices higher

Snapshot of a Buyer’s Market

• An increase in the number of homes proliferate the market with fewer available buyers
• More choice is available to buyers who then may negotiate with more intensity
• The home supply has increased bringing prices down
• More homes are left unsold
• Due to the surplus of homes, prices rise slower often leading to price reductions