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What’s the Difference Between A Buyer’s Market and A Seller’s Market?

One constant question for home buyers and sellers alike is what the market looks like. Everybody is looking to get the best deal from a home sale. Buyers want the best bang for their buck, and sellers want the most money they can get. To determine whether to buy or sell, you must look at if the current market is a buyer’s market or a seller’s market. What are they and what is the difference? It’s all about the economic laws of supply and demand. Read on to lean more.

What is a seller’s market?

A seller’s market is created when increasing demand for homes drives up home prices. These are some of the biggest drivers of demand:

Low inventory: Fewer homes on the market and little new home construction means that prices for existing homes will go up.

Economic factors: The local labor market heats up, which brings an influx of new residents before new housing units can be built.

A short-term spike in interest rates: If rates increase, the amount of money buyers can borrow begins to decrease. This may compel buyers to buy sooner so they can maximize their spending power.

What is a buyer’s market?

A buyer’s market is created by declining home prices and reduced demand. Here are some of the most popular causes of a buyer’s market:

Economic disruption: If a large employer shuts down and lays off their workforce, the area is seen as less valuable to live in and people tend to move elsewhere to find work. With more houses on the market and fewer factors holding people in the area, prices go down.

High inventory: A new subdivision creates more newer homes with more modern appliances and other highly-desirable features. Older homes (potentially lacking these amenities) tend to see a price drop as a result.

Short-term drop in interest rates: Lower interest rates give borrowers more purchasing power. When rates drop, buyers buy quickly before housing prices adjust to the new market rate.

Natural disasters: A recent earthquake, flooding, or hurricane tends to tank property values because of the damage they cause. In addition, the likelihood of such an event happening in the future keeps prices lower than normal.

Interested in buying or selling a home? Contact the Full Sail Boise team to get started.

Full Sail Boise also offers a free no-obligation home valuation.

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