By Terri Williams | Jun 1, 2023
As you might have guessed, a buyer’s market favors homebuyers, not sellers. But what, exactly, does that mean?
“It means external conditions—like supply and demand, comparable sales in the neighborhood, the economy, public opinion, confidence in the future, and changes in the tax laws—favor buyers,” says Robert Elson, a real estate agent with Coldwell Banker Warburg in New York.
These factors create an ideal scenario for buyers in the real estate market.
What does it mean for buyers?
In a buyer’s market, buyers are more likely to get a sweet deal on a purchase.
“If you are in the market for a new home, it’s an ideal time to make your move,” says Jordan Skurnik, a licensed real estate salesperson at Citi Habitats in New York.
Why? “You may be able to use the excess inventory to your advantage and secure your dream home for a lower price,” Skurnik says.
And, because the market is less competitive, he says you are likely to have more time to make a decision and less chance of getting caught up in a bidding war.
You may be able to finagle some additional perks, as well.
“With little competition, buyers can negotiate with sellers to include a home warranty, cover part of the closing costs,” says Candice Williams, a Re/Max Space Center realtor in League City, TX.
Plus, buyers in this situation typically control the closing date, she says.
But don’t get too excited. No one’s giving their home away in a buyer’s market. While you may get a deal, you may not get a steal.
“If your budget allows for $800K, don’t aggressively go after million-dollar properties,” warns Daniele Kurzweil, a licensed real estate salesperson with the Friedman Team at Compass in NYC. It’s still smart to stick to your budget, so you can avoid financial trouble if the markets shift in the future.
What does this mean for sellers?
As you can imagine, a buyer’s market is not a particularly good time for sellers.
“Because so many other sellers are competing for the same group of buyers, sellers may find their properties languishing on the market, sometimes for a year or more,” says Dolly Hertz, licensed associate real estate broker at Engel & Völkers New York Real Estate.
It can be advantageous to make sure your home is move-in ready and shows well in photos. If the home isn’t move-in ready, Williams says sellers should be open to offering additional concessions, such as paying closing costs or a carpet or paint allowance.
“Also, if your home has a unique or uncommon feature—a larger than average backyard, secret room, etc.—it’s important to highlight that feature to buyers,” Williams says.
Are we in a buyer’s market or a seller’s market right now?
The last several years have been pretty rough for homebuyers. In December 2020, mortgage rates hit an all-time low; this subsequently prompted a buying frenzy and made the market a very competitive place. Buyers found themselves having to bid over asking price and waive contingencies just to compete with other buyers and make their offer stand out. At that time, real estate agents shared anecdotes of the average house receiving 10 (or more!) offers. These conditions put us squarely in a seller’s market.
Of course, today’s real estate market has slowed down considerably. Mortgage rates are hovering in the mid-6% range, which is affecting home affordability and deterring both buyers and sellers from making moves. That stagnation is also the result of high home prices. In May, the median listing price grew to $441,000, up from $430,000 in April. And experts predict prices will climb even higher in June.
So while we are certainly not in the unprecedented seller’s market of 2021, we also can’t qualify the conditions right now as favorable for buyers.
But there are a few glimmers of hope on the horizon.
“Based on current trends, it’s possible that [home prices] won’t hit the previous year’s peak for the first time in our data,” says Sabrina Speianu, economic data manager at Realtor.com.
Also, homes are lingering on the market for a median of 43 days, which is 14 days longer than last year. And the number of home listings with price reductions rose from 10.2% in May 2022 to 12.7% this year. These two factors indicate that—for the nation’s housing market as a whole—demand for homes is lower than it was at this time a year ago.
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