When you are entering the real estate housing market, you want to get the lay of the land. Whether you are planning to buy a house or sell one, the balance of the market can lean in your favor or against your interests. Sometimes the economics favor buyers, and sometimes it favors sellers. This is typically known as a buyer’s market versus a seller’s market.
What is a Seller’s vs. Buyer’s Market?
The difference between a buyer’s and seller’s markets is who has the advantage in negotiations. Are sellers trying harder to get a buyer’s attention, or are buyers trying to convince sellers to accept their bids?
In a seller’s market, buyers compete with each other to be accepted by sellers. Buyers are more likely to offer concessions in order to win the purchase, and sellers typically have their choice of buyers and bids. Homes typically sell at or above the listing to get the purchase.
In a buyer’s market, sellers compete to get a buyer’s attention. Sellers typically offer concessions to lure in buyers and may accept less than listing prices just to sell.
The Last Buyers Market Was Around 2012
When was the last buyer’s market? Analyzing past trends, the last buyer’s market was after the housing crash around 2010-2013. After this, there was a brief buyer’s market. During this time, it was unfavorable for sellers to put their homes on the market, and sellers only sold because did not have other options.
This buyer’s market was a time when these fewer, more desperate sellers might perform less than ROI renovations, offer seller concessions, or sell at lower than asking. However, with few houses on the market, not many buyers had the opportunity to benefit from the advantageous position.
2021 Was an Extreme Seller’s Market
The pandemic caused a unique real estate market phenomenon. After decades of under-building, suddenly, families quarantining together realized that every nuclear family needed their own space, that there wasn’t enough room to share, and van/tiny homes became too cramped. Buyers flooded the market.
At the same time, the economic impact of the pandemic and stay-at-home orders brought the interest rate down to a historic low. This led to a frenzy of buyers, a shortage of homes on the market, and spiking home values. It was a historical seller’s market that will not soon be forgotten and may never be repeated.
2022 Put the Brakes on Buyer Frenzy
Over the year 2022, the Fed increased the interest rate from its incredible low by several percentage points. Roughly, mortgage rates raised from about 3% to over 7%.
You may be wondering if this huge interest hit turned the tables and changed the market. It did impact the market, and this huge increase in mortgage prices definitely cooled the buyer frenzy. However, the shortage of total homes for families and the high price of homes today maintain the ongoing status of a seller’s market.
2023 Promises a Buyers Market
The economic conditions of 2022 have not been favorable to sellers. With a growing increase in new construction homes and sellers unable to squeeze higher prices out of buyers, the “wait and see” approach of 2022 will soon, according to Bankrate, result in a tentative buyer’s market.
This buyer’s market will be less about buyer opportunities and more about sellers who can’t wait any longer for the market to improve. Because sellers are likely to be willing to make concessions to make their homes more affordable to buyers under this floating high-interest rate, negotiations will turn in the buyer’s favor.
Your Guide to Today’s Housing Market
If you are currently planning to buy a home or sell a house, Capital Movers is here to make moving the least of your worries. Contact us today to begin planning a smooth and professional relocation, no matter what the housing market has in store.