Nothing is as fickle as real
estate. Housing prices may rise or fall for any number of reasons. Although
they can make investing in your own property a bit of a risk, with a little bit
of knowledge the informed shopper can easily make the best decision possible
when looking at homes for sale.
Buyer's Market
Simply put, a buyer's market is a
result of the economic principle of supply and demand. In this case, there are
more properties in supply (i.e. for sale) than there is a demand for them,
meaning that those looking to invest in real estate have a lot of options to
choose from. Supply and demand fluctuate depending on how many new customers
enter an area and how many homeowners in the region have decided to stay in
their properties.
In these circumstances, there are
plentiful homes for sale, which favors those interested in investing in
residential property. The geographic region and price ranges are favorable and
the cost to purchase is relatively low. If housing in an area tends to take
more than six months to sell, then it is considered a buyer's market. You can
easily find how many days a property has been listed on various real estate sites.
Seller's Market
In a seller's market, it is
harder to find homes for sale. The supply is low in comparison to the demand to
purchase property. Prices are typically a little higher and houses don't tend
to stay listed for as long a period of time.
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When this occurs, there are a
limited number of options. Buyers will have less opportunity to
negotiate-because sellers can entertain other offers-and as a result, will pay
more than they would in a buyer's market. Sellers can increase their prices
and, as long as the homes appraise for the asking price, receive more than they
otherwise could.
What Stimulates the Change
As with everything, housing
properties will fluctuate between shortage and surplus. While there is no clear
determination on how long the current stage will last, there are several
factors that can impact the supply and demand of homes for sale in your area.
Things like interest rates, consumer confidence, and economic conditions have a
high impact. A growing regional economy coupled with low-interest rates and
high confidence can lead more people to buy houses.
However, just because more people
are buying doesn't mean there are also more people selling. Supply tends to lag
behind demand in real estate. While you may think that low rates and good
economic growth would spur a buyer's market, it is actually more favorable to
sellers. That is because there are more parties competing for a limited number
of houses.
When the economy slows down, or
interest rates increase, demand diminishes. When that happens, homes for sale
will stay listed for longer periods of time. With more real estate options
available, qualified purchasers have better chances of finding good deals on
housing in their areas. Buyers can often negotiate with the seller on a much
lower price than what the seller had originally intended. Read more articles on
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