If you’ve ever read anything or spoken to anyone about property, the chances are the phrase ‘buyer’s market’ would have sprung up. It is one of those expressions that is used so often that it is taken for granted that everyone knows what it means? But what does it mean exactly? Is it simply implying that it is a good time to buy property or is there more to it than that?
According to the Cambridge English dictionary, a buyer’s market is a time when there are more goods for sale than there are people to buy them, so prices are usually low. This could be a result of high unemployment, fear of interest rate increases or other factors which make people think twice about moving up into a larger home or purchasing a home for the first time. In this type of market housing prices can be stable or perhaps even drop.
Although a buyer’s market doesn’t sound very positive from an economic standpoint, there are a few benefits that buyers could take advantage of. As there are more sellers than buyers it shifts the pressure off the buyer onto the seller, therefore giving the buyer more time to look around and find the home or investment he/she really wants. It, of course, also gives the buyers options with the greater number of properties on the market.
So now the question is what determines a buyer’s market? Several factors influence the property market as a whole, whether it be positive or negative. However, the largest factor would be economical. The market is greatly affected by what the economy is doing whether that be employment levels, interest rates, investment growth, legislative changes, and so on. Another influencing factor is construction – too much construction can lead to a flood of stock in the market - this coupled with challenging or uncertain economic times is the perfect buyer’s market cocktail.
One of the biggest mistakes sellers make in a buyer’s market is that they panic and that leads to unrealistic listing prices often making the property even more difficult to sell. During this time it is more important than ever to seek the services and counsel of an experienced real estate agent. The agent will be able to confirm what phase of the market you are entering into and will help you set a realistic listing price. They will also be able to help you with negotiations as sellers will find that buyers have stronger leverage in this sort of market.
Whether you are a buyer or a seller, it is vital to know what phase of the market you are dealing with as that will determine your approach. The other thing to consider is that markets change. If it is a buyer’s market, sellers should consider their situation carefully before making any decisions. On the other hand, buyers should be wise and invest where they know the property will retain its value.