Industry News
What is a Buyer’s Market?
If you have ever spent any amount of time around real estate, you’ve heard the term – Buyer’s Market. So what exactly does that mean?
A buyer’s market comes from the idea of “supply and demand”. This law states that a supply increase when there is constant demand puts downward pressure on prices, while a demand increase amid constant supply puts upward pressure on prices.
The term “buyer’s market” is commonly used to describe real estate markets, but it applies to any type of market in which there is more product available than there are people who want to buy it. The opposite of a buyer’s market is a seller’s market, a situation in which demand exceeds supply and owners have an advantage over buyers in price negotiations.
Characteristics
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 must engage in a bidding war to purchase the home.
The subsequent housing market crash created a buyer’s market in which a seller had to work much harder to generate interest in his or her property. A buyer expected a home to be in excellent condition or get a great deal on the property and purchase the home for much less than the listed price.
Key Takeaways:
- A buyer’s market refers to a situation in which supply exceeds demand, giving purchasers an advantage over sellers in price negotiations.
- Buyer’s market is commonly used to describe condition in real estate markets, but it can apply to any type of market where supply exceeds demand.
- The opposite of a buyer’s market is a seller’s market, a situation in which demand exceeds supply.
source: investopedia.com
