Supply and Demand is like Gravity

By
Real Estate Agent with Huckaby Briscoe Conroy Group - Keller Williams

Supply and demand is like gravity as both are extremely strong forces.  By definition, gravity is the natural force that tends to cause physical things to move towards each other.  Overcoming gravity is possible but to do so requires a significantly stronger counterforce.  Supply and demand is an economic model whereby the buyer’s desire for a commodity, product or service owned by a seller determines the price in a competitive market.  The force is competition and it is in my view as strong if not stronger than the force of gravity.

It never ceases to amaze me the phenomenon that occurs when more than one buyer wants to purchase a house.  As soon as there is competition, the desirability of the home increases, the competitive force is magnetic.  That is one benefit to hosting public open houses that perhaps sellers do not always consider – if there is more than one buyer group present and they see that there are other buyers interested – it often increases the desirability of the house.  A seller client of mine inquired if he should allow two agents schedule to see their home at the same time.  I said “absolutely”, it shows that there is interest in the home by other people.

The market story is that action creates reaction.  Projections and comparative market analysis provide only so much insight.  It is actually being on the market that truly determines whether there is demand. That is why when people inquire about pocket listings I share that being on the open market is the majority of cases the best determiner of value.  It becomes apparent very quickly whether the calculations made are in line with the market and thus the pricing is correct.

An area with high demand for homes is always coupled with low supply of inventory.  Economists and other experts consider a balanced market in real estate to be when there is about a six month supply available.  More than a six month supply is considered a buyer’s market and less than that is considered a seller’s market.  So it is no surprise that a market segment with low supply and high demand is experiencing quick sales with multiple offers, escalation clauses and limited if no contract contingencies.

In the market segments where purchasers have a lot of choice, there is usually downward pressure on price.  It is common in those scenarios to find that homes are on the market considerably longer, waiting for more buyers to enter the market.  Price will solve this situation, at some price point there is always a buyer.

Karen Briscoe and Lizzy Conroy as well as their team of agents at HBC Group at Keller Williams are market experts in the Northern Virginia, suburban Maryland and Washington, DC market place.  Whether selling or buying a home, our group of professional Realtors® are delighted to be of service. Please contact via the means most convenient for you:  www.HBCGroupKW.com, 703-734-0192, Homes@HBCGroupKW.com.

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supply and demand
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Rainmaker
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Sheila Anderson
Referral Group Incorporated - East Brunswick, NJ
The Real Estate Whisperer Who Listens 732-715-1133

Good evening Karen. The title here is terrific and your post does not disappoint. Please use a bigger font though so those of us with older eyes can read it easily.

Apr 27, 2017 04:33 PM #1
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