Real estate agents and experts will frequently declare that the market is either a seller’s market or a buyer’s market. There isn’t some esoteric industry secret formula, though. Figuring out whether it’s a buyer’s or seller’s market is actually fairly straightforward, as long as you have access to relevant data. There are three indicators of a seller’s market: low inventory, high demand, and low construction.
Of course, these statistics are interrelated. If construction has been consistently low, there will be fewer homes on the market. If inventory is low, buyers will be more competitive, driving up demand. But it’s actually low demand and high inventory that reduces construction rates in the first place, resulting in a cyclical effect. Moreover, each of them are affected differently by factors external to the cycle. So, in order for there to be a seller’s market, all three factors are probably true.
So what should you do if you find yourself under the conditions of a seller’s market? Well, if you’re a seller, everything is great — you’ll probably find a buyer, and be able to sell at a high price, as well. However, even if you’re a buyer, you can work the seller’s market to your advantage. Be aware that prices will be higher in a seller’s market, so a home that looks overpriced may actually be perfectly priced in a seller’s market. If you see something that fits the criteria you’re looking for, be ready to make an offer. It’s likely that multiple buyers are looking at the same thing you are. Make sure to get a pre-approval so that sellers know your offer is serious. In a high demand climate, sellers may get so many offers that they won’t even look at offers that don’t seem genuine.