Ask the Rocca Sisters: What is the difference between a Buyer’s and Seller’s market?
Welcome to our weekly feature, “Ask the Rocca Sisters”, where we answer the important questions we get from clients, colleagues, and members of our community. This week’s question comes from Sarah B. in Hamilton: “What is the difference between a buyer’s market and a seller’s market? How much does this affect me as a seller?”
Question: What is the difference between a buyer’s and seller’s market?
Hi there, Tanya Rocca here to answer this question. This is a question we have gotten a lot in the last little while. People will hear real estate buzzwords and feel a little overwhelmed if they do not understand them in context and may even choose to hold off buying or listing their home until the conditions for sale or purchase are ideal.
First, let’s do a quick run-down of the definitions of each:
Simply put, a buyer’s market exists when there are a greater number of homes for sale than there are buyers. When this is the case, the supply exceeds the demand, and buyers can have an easier time dictating the conditions and the price of their new home. In short, buyers can afford to be pickier about the home they purchase, and sellers will have to be a little more flexible and well-prepared in order to make the sale (for example, their home must be priced appropriately, and the home is at full potential with repairs and staging).
This is the exact opposite, and in this case the number of home on the market is lower than the number of people looking to purchase. We saw a lot of this in 2017, when sellers could afford to be pickier about to whom they sold their homes, what prices and what conditions they would be willing to accept. When the demand exceeds the supply in this way, it can lead to things like bidding wars.
How much does this affect me as a buyer or seller?
Now that we know the definitions of each of these markets, the logical question is how much this should affect your decision to buy or list a home. Ultimately, I advise not to get too caught up in generalizations like these. The fact is that every home and homeowner is unique; the location of your property, the age of the home, even where on a street you live can impact how quickly your home will sell. Likewise, if you’re looking at an underpriced or unique property, you may find yourself in a bidding war. Ultimately, it is all relative when you are buying in the same market: when you sell high you will most likely buy high. Regardless of whether you’ve heard that it is a “buyer’s market” or “seller’s market,” if you are ready to move, are happy with the listing price of your home and the asking price of home you are looking to buy, there is no reason why you shouldn’t be able to get everything you want!
Have a question for Cathy or me? Let us know and we’d be happy to answer them in an upcoming post. If you don’t want to wait, please feel free to reach out to us privately and we’ll be happy to answer you too!