Commonly heard in the real estate market, the terms “buyer’s market” and “seller’s market” are essential to know when purchasing a home. As with any market, simple supply and demand, interest rates, inflation, economic growth, or even employment can cause fluctuating business cycles. All these factors play a role in determining whether the current state of the market favors buyers or sellers.
What is a Buyers Market?
When the supply is higher than the demand, or when there are more sellers than buyers in the market. Sellers here typically have to sell to the buyer at prices and conditions that are acceptable to the buyer. Buyers have the most control in a buyer’s market as they can demand reduced prices.
What is a Sellers Market?
When the demand is higher than the supply, or when there are more buyers than sellers in the market. Buyers here compete with each other to purchase one property. Sellers have more control over the set prices and the conditions under which the sale is made.
Sellers have the upper hand in a seller’s market as the buyers must meet the costs and requirements set if they want to purchase the home.
What is the difference between a Buyers Market and Sellers Market? As defined above and its name suggests, a buyer’s market is beneficial to the buyer, while a seller’s market is beneficial to the seller. The main difference between the two is: 1) Supply is more significant in a buyer’s market than demand, resulting in competition among sellers and a limited number of buyers. This causes price decreases. 2) Demand is more significant in a seller’s market than supply, resulting in competition among buyers and a limited number of sellers. This causes price increases.