Understanding Real Estate Market Terms- Seller's Market and Buyer's Market by Tammy Dufault
It's important to understand the current real estate marketplace because it will affect how you might approach the market if you are looking to buy, sell or rent. The type of market - whether it is a seller's market, buyer's market, or balanced market, is determined based on the ratio of potential buyers to properties for sale and can differ considerably from region, city or even neighbourhood. There are different circumstances that create each type of market, as explained below.
A seller's market happens when the number of homes for sale (inventory) represents a shortage of homes available for purchase compared to the number of buyers who want to purchase. This is generally beneficial to selllers as it creates more competition and can potentially drive prices up due to increased demand, perhaps even resulting in multiple offers. However, it's important to remember that listing in a seller's market doesn't guarantee a quick sale.
A buyer's market on the other hand is created when there are more homes for sale thatn there is demand from buyers interested in buying them. Buyers can benefit from more choice, price reductions and opportunities to negotiate in their favour.
A balanced market occurs when the number of homes for sale is balanced to the number of buyers wanting to purchase them. There is greater stability in buyering and selling conditions as the selling prices for homes doesn't particularly favour the buyer or the seller.
Inventory isn't the only thing that affects market type. There are other important factors such as lender interest rates, employment rates, new construction, immigration and local as well as global economies. The current global pandemic has a significant impact, influencing supply and demand in the marketplace and will continue to do so.
Your realtor is a knowledgeable resource and can help you determine the marketplace. If you have a question about home buying or selling please contact me.
Source of information: Real Estate Council of Ontario
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