On the Move - City2Shore Gateway Group May 2023Buyers -vs-Sellers’ real estate market?
Buying or selling a home is a significant decision that involves a significant financial investment. The real estate market can be classified into two categories - seller's and buyer's markets. Understanding the difference between these two markets is crucial for both buyers and sellers.
Seller's Real Estate Market
A seller's market occurs when the demand for homes is high, and the number of homes for sale is limited. In such a scenario, home prices tend to be high, and they may continue to rise. As a result, sellers have more negotiating power, and homes tend to sell quickly.
In a seller's market, buyers may face intense competition from other buyers, leading to bidding wars. As the demand for homes increases, buyers may have to pay more than the asking price to secure a property.
Factors that can contribute to a seller's market include low-interest rates, a strong economy, and a growing population. These factors can lead to increased demand for housing, which can cause home prices to rise.
What’s the difference in West Michigan now? We don’t have a strong national economy, nor do we have overall low interest rates. What we do have locally is a blend of all these factors. High employment rate, above average income a low inventory of homes for sale have collided to cause an intense sellers’ market. Buyers need homes of course, but many sellers are refusing to sell and add available inventory to the West Michigan market. In talking with many potential sellers, they are holding on to their home because they are insecure regarding the state of our national economy and because so many have significantly lower interest rates than what is available to them now if they were to secure a mortgage. (more details are available in previous blogs)
Buyer's Real Estate Market
In contrast, a buyer's market occurs when the supply of homes exceeds the demand. In such a market, there are more homes for sale than there are buyers. As a result, home prices tend to be low, and buyers have more negotiating power.
In a buyer's market, sellers may have to compete with each other to attract buyers, which can lead to lower prices. Homes may stay on the market for longer, giving buyers more time to consider their options and negotiate with sellers.
Factors that can contribute to a buyer's market include high-interest rates, a weak economy, and a shrinking population. These factors can lead to decreased demand for housing, which can cause home prices to fall.
It seems unlikely that we are going to see a buyers’ market for some time. At this point, some equilibrium between a buyers and sellers’ market seems in doubt as well. Barring a worldwide economic crisis, we in West Michigan are likely going to see our home prices continue to rise as the nation’s inflation rate and demand continue to rise. For those interested in buying a home in 2023, the best time to buy would be today rather than postponing and hoping rates or prices will come down. Arguably, rates have stabilized and should stay relatively consistent over the next 12 months, however the price of homes in West Michigan will likely continue to rise. Add to that, the continued devaluation of the US dollar due to inflation and your best option to buy a home would be right now.
Which Market is Right for You?
Whether you're a buyer or a seller, understanding the current market conditions is crucial. In a seller's market, sellers can benefit from higher prices and faster sales. In contrast, buyers may find better deals in a buyer's market.
If you're a seller, it's essential to price your home correctly, work with a reputable agent, and be prepared for multiple offers. If you're a buyer, it's crucial to do your research, be patient, and have a clear idea of what you're looking for in a home.
Factors that can influence the real estate market include economic conditions, demographic trends, and location. By understanding these factors, buyers and sellers can make informed decisions and achieve their real estate goals.
In conclusion, the real estate market can be categorized as either a seller's or a buyer's market. In a seller's market, demand for homes is high, and there is limited supply, resulting in higher prices and more negotiating power for sellers. In a buyer's market, there is an excess supply of homes, resulting in lower prices and more negotiating power for buyers. Understanding these differences is crucial for both buyers and sellers in making informed real estate decisions. If you would like to talk more about your options to sell or buy including timing and values, please feel free to message me for some direction. Gbrown@city2shore.com 1-616-895-8000