ūü§Ē What does a "Sellers Market" actually mean?

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Real Estate Agent with Chris Alston (Keller Williams Realty, Silicon Valley, California) 01338415

Ask this question, and you will get a variety of answers.  So it really depends on who you ask.  The three types of markets that economists talk about are buyer, seller, and transitional markets.

The idea behind the answer comes from how many days/months of supply any given area has.  This is calculated by the actual number of units (Homes) on the market, and how many actually sold over any given period of time. Say there are 1,000 homes, and 500 sell a month.  This would mean you have two months of inventory.  The same market at 5,000 homes with 500 sales a month would have 10 months of inventory.  It is pretty basic, but is an economic indicator surrounding a buyers vs a sellers market.

A seller's market is when there are more buyers than sellers.  An increase in buyers can lead to multiple offers and a rapid increase in values.  Sellers have the ability to choose the buyer due to the number of offers presented, and usually have the upper hand in negotiations.  

A buyer's market is when there are more sellers than buyers.  With this increase in inventory, buyers can take their time shopping for a home.  They may see one home this week, and decide to write on it next month.  The buyer usually has the upper hand, as the buyer can just walk away from the table and write on a different home.

A transitional market is when there is no real advantage from the buyer or the seller.  A good health supply of homes, and many buyers to make offers.  Lots of back and forth in offer negotiations.  Neither party has the upper hand, so negotiations could take a bit longer.

National economists will state that a market with 1-3 months of inventory is a seller's market, 4-6 months of inventory is a transitional market,and 7+ is a buyer's market.  This is on the macro level.  National economists are being paid to do just that, explain the national market as a whole.  However, some markets could be in a buyers market with 1 month of inventory...

When you dive into the neighborhoods that you live in, you can see a completely different picture.  Areas of Silicon Valley for instance are seeing 10 days of inventory on the market.  This means that the average home is selling quickly in this hyper-aggressive seller's market.  We see these types of markets in the first few weeks or months of the year as buyers are out, but sellers are not yet ready to sell.  However, if the days on market increases to 20+ days, you will see a "doubling" of that number.  This could make buyers feel they have moved into a buyer's market, but sellers still expect it to be in a sellers market.  So the buyer vs seller market is very fluid, and can change fast.  The change doesn't always follow what the national economists say.

Real Estate is ever changing, and very local at its core.  Understanding the market can help you buy or sell at the right time.  Zooming in on the neighborhood can help you determine who could have the upper hand in the negotiations.

Call us today.  Let us guide you through the complexities of this market, and set you on the correct path to achieve your real estate goals!

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Chris Alston

 

Home sales and purchasing specialist

Keller Williams Realty, Cupertino

19400 Stevens Creek Blvd, Suite #200

Cupertino, CA 95014

408-850-6955

408-850-6956 fax

calston@kw.com

www.LivePlaySiliconValley.com

 

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