You’ve probably heard the terms “buyer’s market” and “seller’s market” before. They come up in all kinds of real estate conversations, from front-page headlines to conversations among friends and family.
That said, not everyone has a complete understanding of what they really mean, and more importantly, how they can impact your real estate goals.
If you plan to buy or sell property soon, understanding the current market dynamics defined by these terms is crucial. In this blog, we’ll look at the differences between a buyer’s and seller’s market – and what you need to know before you make real estate moves.
Why Do We Have a Changing Market?
While supply and demand can shift drastically on short notice or evolve over time, it’s never without reason. Factors like economic conditions, cultural and demographic trends, and even regulatory changes can all sway supply and demand, influencing the real estate market both directly and indirectly.
Interest rates are a great example of this. When the Bank of Canada (BOC) famously dropped their target interest rate back in 2020, buyers rushed to the market to capitalize. This created a major shift in supply and demand. When the BOC brought their rate back up a few years later, the market also changed drastically.
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What is a Buyer’s Market?
A buyer’s market happens when the number of homes for sale exceeds the number of individuals or families who are looking to buy. As the name suggests, a buyer’s market typically benefits buyers.
Inventory is a great example of this. With more available homes to choose from, buyers have the benefit of being selective and not settling for a home that doesn’t meet their needs. Plus, with less competition from other buyers, there’s less urgency in the buying process, allowing for confident, well-thought-out decisions.
Not to mention, buyers can also get an upper hand during negotiations. If you’re placing an offer or actively negotiating, you can try to make the deal as favourable as possible.
What is a Seller’s Market?
A seller’s market is essentially the opposite of a buyer’s market. Supply and demand have flipped, and there are now plenty of buyers but few homes to choose from. As buyers get more competitive, they’ll find new ways to stand out and impress sellers.
In a seller’s market, homeowners often have the advantage of listing their properties at higher prices and still attracting significant buyer interest. Additionally, homes typically sell faster, leading to a smoother and less anxious selling process. Finally, with the market working in their favour, sellers have the upper hand in negotiating – helping them secure a deal that matches their goals.
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Real Estate is Never Black and White
Now that we’ve covered the differences between a buyer’s and a seller’s market, it’s important to clarify that you can’t always just distill a market into any of these two categories and go from there.
In reality, real estate is incredibly nuanced. Trends can change day by day and be different based on location and property type. One neighbourhood might see a buyer’s market, while the next neighbourhood down the road looks more like a seller’s market.
For example, just because your local market looks like a seller’s market, that doesn’t mean you can list your house with no preparation and expect a bidding war. Or, as a buyer, even if the market is in your favour, that doesn’t mean you won’t need to think strategically as you approach your purchase.
The same thing goes when you’re working against the market. If you have a great real estate agent by your side, you can accomplish a positive purchase or sale no matter what the market looks like.
Buying or Selling? Work With Bosley
To navigate the complexities of buying or selling a home effectively, understanding the market is a crucial first step. However, a significant factor that will influence the success of your transaction is the real estate agent you decide to partner with. That’s where we come in.
Whether you’re buying, selling, or both, our in-depth knowledge of local markets and savvy negotiation skills can help you get a great result.
Buying or selling your home? Get in touch to find out how our expert agents can help. Send us an email at info@bosleyrealestate.com or call 416-322-8000.
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