What is a buyer’s market?

Summary: A buyer’s market is when a home buyer can negotiate lowering the listing price because there are more houses for sale than there are people who want to buy them. Houses tend to sell for less and sit on the market for a longer period of time before receiving an offer during this time.

 

The best bang for your buck

When you buy a new home in Dayton, Ohio, you’ll want to be sure you’re getting the best value for your money. You may have heard the terms “buyer’s market” and “seller’s market” before, but there’s a chance you are unfamiliar with the difference between them. Note that there can be several different markets, even within the same state. Some people find themselves in a situation where they are both selling a home at an advantage and buying a home at an advantage, or any combination of the two, depending on where they decide to move to. This can play a pretty significant role in people’s decisions to relocate.

 

Buyer’s markets don’t last forever. It can be really difficult to accurately predict what the market will do because things change pretty slowly. You might end up waiting months, or even years, for things to change. Unfortunately, when the circumstances do change, it may not be in your favor.

 

When is it a buyer’s market?

When the prices of homes are declining and the demand for buying houses is reduced, it’s considered a buyer’s market. Home buyers have an advantage over sellers when the number of houses for sale exceeds the number of people looking to buy a house. It is common to see more price negotiations to lower the price. In a buyer’s market, houses tend to sell for less and sit on the market for a longer period of time before receiving an offer. The competition in the marketplace exists between sellers, who often need to engage in a price war in order to entice buyers to make offers on their home, rather than on ones down the street.

 

What may affect the buyer demand?

There are a few things that can affect the buyer demand. Some of these things are:

  • More Inventory –– when a new subdivision pops up, it can create less pressure on prices of older homes nearby, especially if they are outdated.
  • Economic Disruption –– if a big company shuts down, laying off their workforce, it can affect the market.
  • Higher Interest Rates –– when you borrow less money to buy a home because the cost of money is higher (the interest rates are increased), it can reduce the total number of potential buyers in the market.
  • Natural Disasters –– a recent earthquake or flooding can lower property values in the neighborhood.

 

How does it work?

Well, let’s say that there’s a city, Kevinsville, with 80,000 homes. 2,500 of those homes are for sale. A large, automotive plant in Kevinsville is closing, leaving thousands of people out of jobs. All of these people need to sell their houses and move to another town with better jobs to keep their families afloat. 2,500 people put their houses on the market, bringing the number of houses for sale up to 5,000.

There are very few people trying to move to Kevinsville right now due to its lack of jobs, and the people who already live in Kevinsville are not in a position to buy a new home and move, given the shaky job market. Accordingly, the few people who are interested in buying a home in Kevinsville right now a major upper hand. There are a lot more sellers than buyers, making Kevinsville a buyer’s market.

 

Why does it matter?

In a buyer’s market, buyers can find newer homes at a lower price than in other markets. When a lot of sellers are competing for buyers, they are more likely to accept a lower offer for their homes. This often means big savings for buyers, who might also be able to dictate other terms of the deal (such as who pays the closing costs).


Definition According to Merriam Webster

Buyer’s Market (n): a market in which goods are plentiful, buyers have a wide range of choice, and prices tend to be low

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