Difference between a buyers and a sellers market

What is a buyers market?

A buyers’ market occurs when there are plenty of homes available, but not enough qualified buyers to ‘absorb’ them all. Housing supply is high while demand is low,” homes take longer to sell and homeowners often have to reduce their asking prices to land a buyer. Sellers have to take whatever they can get, for the most part.

What is a sellers market?

It occurs when there are few properties listed for sale, but plenty of buyers ready to purchase. In other words, supply is low but demand is high. In these situations, buyers have to fiercely compete with one another for a limited number of homes. Multiple offers are common, and they can turn into bidding wars.”

And everything in between?

Buyers’ and sellers’ markets are two extremes and that there is a wide swath of middle ground as well. “In some cases, housing supply and demand are more balanced. So the market doesn’t really favour one party over the other. There tends to be more negotiating in a balanced market, because the buyer and seller have equal leverage.

How do you gauge the market?

So, how do you know whether you’re in a buyers’ or sellers’ market? According to Rhys Dyer, CEO of ooba, South Africa’s largest bond originator, there are several ways to gain this kind of insight.

• Read your local newspaper. “Home prices and housing markets are a hot topic right now, so your local news is bound to be watching it closely. Look for stories published within the last three months or so, since property conditions change over time,” he advises.
• Use the Internet. “Do a Google News search for your city’s name, followed by the phrase ‘property market’ or ‘house prices’,” he suggests.
• Talk to an estate agent. If anyone is in a position to make the call between a buyers’ market or sellers’ market, it’s an experienced agent, says Dyer. “They can be a great source of information. Besides, if you are truly in a buyers’ market right now, you’ll want your name on the books of your chosen area’s agents, not to mention a reputable bond originator by your side to help you with your home loan application.”
• Ask around. “Seek out friends, family members or co-workers who have either bought or sold a home in the area recently,” he advises. “Ask them about their experience. They should be intimately familiar with the current state of your local housing market.”