What is a seller’s market?

Summary: A seller’s market is when there are more buyers than homes for sale. Since supply is less than demand, homes are higher priced and more attractive to sellers in the market.

 

What Causes a Seller’s Market?

A seller’s market occurs when the demand for homes is greater than the actual number of homes for sale. One big factor in causing a seller’s market is a drop in interest rates. When the interest rates drop, it qualifies more people to buy homes or to afford the more expensive homes. An increase in employment opportunities and population growth also bring more buyers into the market. New or expanded government housing assistance programs can allow for special low-interest loans, down payment assistance, or tax credits for qualified buyers too.

 

Signs of a Seller’s Market

The market’s absorption rate is the best way to determine if an area is behaving as a seller’s market or buyer’s market. An absorption rate is calculated by looking at the number of homes sold in a certain month and dividing it by the total number of homes for sale at the end of the month. If an absorption rate is 20% or higher, it is usually defined as a seller’s market, since homes are selling relatively quickly and the supply of homes is low. Homes don’t stay listed for too long in a seller’s market. Many homes sell in weeks, while others take days or even hours! Many sellers even find themselves mediating a “bidder’s war” between multiple interested buyers. Not surprisingly, some of these homes will sell for way more than the listing price, as the desperate buyers offer top dollar.

 

Seller’s Taking Advantage

The best way to make sure you’re taking full advantage of a seller’s market is to work with an experienced Realtor. Your Realtor will help you know just how high you can price your home, and what offers are worth a second look. You’ll also need to cultivate some patience – if this is your first time selling a home, you may be tempted to jump at the first offer you get, but hold on just a little. If it’s a true seller’s market, you could well receive a higher offer tomorrow, and a better one the day after that.

 

Also, if you’re needing to buy a home as well as sell one, you can look into the option of a “lease back”. A lease back is when you rent your former home (the one you just sold) from the new buyer for a month or so. This could work really well for a buyer who feels rushed into making a quick decision in such a hot market, but still needs a little time to relocate. If you find yourself in this position, make sure you reach out and let me know and I can help.


Definition According to Merriam Webster

Seller’s Market (n): a market in which goods are scarce, buyers have a limited range of choice, and prices are high

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