If you’re currently trying to buy a home in a seller’s market, it isn’t impossible, but you may end up having to pay a higher price for the home you want. With the right strategies, however, you can successfully buy a house in a seller’s market.
Definition and Example of a Seller’s Market
In a seller’s market, there are more buyers looking for homes than there are homes available. Since there are fewer homes to choose from, multiple buyers will often be interested in purchasing the same properties. When a seller begins receiving multiple bids, this can quickly lead to a bidding war and drive up the price of the home. For that reason, a seller’s market is a great time to try to sell your home and receive a premium price. When the pandemic first hit in March 2020, the housing market came to a halt. But once the country began to reopen, the demand for houses began to go up. In 2021, interest rates for a 30-year mortgage hit a record low, falling as low as 2.65% in early January. The combination of factors led to a very competitive seller’s market.
How a Seller’s Market Works
In a seller’s market, the demand for houses outpaces the current supply. This means there are more buyers looking for homes than there are homes to sell. Housing prices quickly go up because of the increased demand, and homes stay on the market for less time. The housing market is cyclical, and there are a number of different conditions that can create a seller’s market. If you’re looking to buy a home, here are some signs you may be attempting to buy in a seller’s market.
High Home Prices
When there are fewer homes available, housing prices start to go up. That’s because sellers often receive multiple offers and can negotiate for a higher selling price.
Homes Sell Quickly
One of the key signs it’s a seller’s market is that homes don’t stay on the market very long. Since there’s a high demand for houses and limited inventory, homes often sell quickly after being put on the market.
Bidding Wars
Low inventory and high demand means that multiple buyers will often make offers on the same property. This often leads to a bidding war, where multiple buyers are competing to outbid one another.
Seller’s Market vs. Buyer’s Market
In comparison, in a buyer’s market, the supply of homes outpaces the demand. This gives buyers the advantage to negotiate for a lower price and ask for more seller concessions. In a buyer’s market, real estate tends to go for less than asking price, and houses usually stay on the market for longer.
