Buyer’s and Seller’s Markets: The Basics

Real estate transactions can be time consuming,
overwhelming, and expensive, regardless of whether you are the one buying or
selling, and, depending on its condition, the state of the market in your area
can either alleviate or exacerbate these feelings.

Generally, a healthy real estate market benefits both buyers
and sellers, with a variety of homes available to choose from and relatively
stable and affordable prices that are based on the financial health of the
location you’re in. But sometimes, the scales can tip one way or the other,
which can end up benefitting one party more than the other. These markets are
most often referred to as either buyer’s markets or seller’s markets.

So, what exactly do these terms mean to buyers and sellers
and which party benefits most from which market? We’ll cover that and more in
this post in order to give you a clear understanding of which market conditions
you may want to conduct your next real estate transaction in.

What is a Buyer’s Market and Who Benefits From it?

A buyer’s market refers to a real estate market in which
there are a lot of competitively priced homes available for sale in a specific
location, like a city. In this type of market, buyers typically have the upper
hand.

In a buyer’s market, home sellers must compete with one
another to sell their properties. With so many homes on the market, home buyers
can be pickier about things like the curb appeal of the home, what renovations
or upgrades have been done, and, most importantly, the price.

This means that home sellers who are highly motivated to
sell may need to lower their asking price, complete high-value renovations
(like a kitchen or bathroom revamp), or offer other incentives that could
encourage a buyer to commit (like including a home theatre system or upgraded
appliances in the sale of the home).

Buyers also have more opportunity to negotiate pricing in this type of market, and a homeowner who needs to sell their home may be more open to accepting a lower offer on their home than what they paid for it or what it has been appraised for, depending on how desperate they are to sell.

However, home sellers who can stand to wait may want to hold
out for a more stable market, or, if they can, a seller’s market, in which they
would have potential to reap significant financial benefits.

What is a Seller’s Market and Who Benefits From it?

A seller’s market is when there are a lot of home buyers
looking to purchase, but few homes on the market in a given area. Sellers
benefit the most in these market conditions.

Contrary to a buyer’s market, in a seller’s market, home
buyers are the ones who must compete with each other for available homes. This
means that sellers can up their asking prices, sell homes that may not have
sold otherwise (for example, homes that need significant repairs or upgrades),
and may even be able to reject lower offers and hold out for better ones with
confidence.

In some seller’s markets, home owners can see their homes
sell for significantly more than they initially paid for it.

What Causes a Buyer’s or Seller’s Market?

The real estate market can be influenced by a number of different
factors that can determine whether home buyers or sellers will come out on top.

Some of the most impactful market fluctuations can be caused
by:

The local economy

Take an area like Silicon Valley, for example. It’s
considered to be a global tech center, attracting tech professionals from all
over the world to work for some of the biggest and most well-known companies
that exist today, such as Google, Facebook, Apple, and more. Startup hopefuls
and tech professionals flock to the area to live and work in one of the world’s
most influential tech hubs.

With a booming economy comes a need for housing, which is a major issue that affects the market in Silicon Valley. For example, in Cupertino (where Apple is headquartered), the median home value is $ 2.2 million. This makes Silicon Valley a seller’s market since there are fewer homes available for purchase and their listing prices can be astronomical.

Alternately, if the local economy were to suddenly plummet
in Silicon Valley, it could easily become a seller’s market, with people who
purchased high-priced homes looking to get rid of them quickly and at a
potentially lower asking price.

The neighborhood

Home values can also fluctuate based on the neighborhoods
they are located in. For example, if a city plans to revitalize a previously
worn-out and undesirable area by building a new NHL arena, it’s likely that
those developments will influence and encourage a seller’s market at some
point.

As well, other homes in the area can affect the market. For
example, in a newly-developed subdivision, there won’t be existing historical
property values to base purchase prices off of. Instead, sellers will need to
determine a price based on other factors, like the cost to build the home and
so on. However, the more people that purchase homes in the area, the more
desirable it becomes, which can lead to a seller’s market as well.

Historical property
value and desirability

While less focused on time-sensitivity than things like
booming economies and new amenities, historical property values and the
location’s reputation can also play a role in what type of housing market takes
precedence in a given area.

In areas with low desirability (either from crime, lack of
amenities, poor curb appeal, etc.), houses tend to be less expensive, with
historical property values that reflect that, even if they are new builds or
upgraded homes.

In areas with low historical property values and
desirability, buyers may be able to take advantage of new developments in up
and coming areas where prices may be lower than other areas where historical
property values are higher. Buyer’s markets can happen in new subdivisions
where property values have yet to be adjusted for the newly developed area,
getting buyers more bang for their buck.

Determining The Best Move For You

Whether you are buying or selling, chances are you have
little to no control over the housing market in your area. The best that you
can do is to pay attention to the trends, consider your motivations and
timeline, and sell or buy in the most ideal market conditions that you can.
While buyer’s and seller’s markets can tip the scale, buying or selling in a
stable and healthy market isn’t a bad option either, so focus on your goals,
keep an eye on the market, and time your move as strategically as you can to
get the most out of your next real estate transaction.

The post Buyer’s and Seller’s Markets: The Basics appeared first on LawDepot Blog.

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Good Sign for Buyers: Housing Inventory Growing Again

The growth is potentially a big deal for homebuyers for multiple reasons. As inventory grows, buyers have a wider selection of homes to choose from. More homes for sale can help reduce bidding battles among buyers for a home purchase. And higher housing supply may put more pressure on sellers to cut listing prices.

There were 3% more homes for sale nationally in October than the same time a year ago, according to a new report. The online real estate firm Zillow reported inventory fell for 44 straight months on an annual basis before realizing the uptick. A 1% jump in inventory in September spurred a greater gain in October, a possible sign of future gains in available inventory.

The surges came after inventory declined last October at a 10.2% annual pace. Expensive markets that were among the nation’s hottest saw some of the biggest inventory gains. Take San Jose, California. It had the biggest annual inventory jump, adding about 1,500 homes to boost inventory by 93.1% from last October. San Diego, San Francisco, and Seattle also experienced the greatest increases in the number of houses for sale.

Still, rising mortgage rates could dampen the rising housing stock if the higher rates scare off potential buyers.

“In yet another sign that the housing market is cooling, we’re finally starting to see inventory return after several years of annual declines,”  Zillow Senior Economist Aaron Terrazas stated in a press release. “The combination of tight supply and strong demand have pushed up home values in recent years, but markets always ebb and flow and there is no doubt that the tides that have buoyed sellers are shifting.”

Terrazas added, “Buyers are not out of the woods yet: While there are more homes for sale, rising mortgage rates are quickly eating into what they can afford to pay. First-time buyers have benefited from flat or falling rents over the past year—making it somewhat easier to save for a down payment—but the decline in rents could be short-lived if higher buying costs push some people back toward the rental market.”

On the home appreciation front, Zillow reported median home value nationally at $ 221,500, up 7% from this time last year. The median rent is $ 1,442, down 0.1% ($ 1 per month) year-over-year, the second straight month of annual rent declines.

But before purchasing a home, here are some tips for buyers to consider:

  • Identify a realtor to work with that’s in your area. Real estate agents can offer helpful insights, including disclosing how fast homes are selling and for what price. They often can help you negotiate a price to make your offer stand out over others. To find an agent in your area, enter your zip code at www.realtor.com/realestateagents
  • Know your budget and stick to it. Before you even start shopping, figure out what you can afford to spend by receiving a pre-approval from a lender to learn the amount of money you’re qualified to borrow. When determining your final budget, examine other costs of homeownership, including property taxes, insurance, and utilities. If listings are scarce in your market, home prices are likely to rise as bidding for available houses drive them up.
  • Avoid cases where you are competing against other buyers and counteroffering over what you can actually afford. Don’t be afraid to back off if the price exceeds your budget.
  • Identify needs versus wants.

As you begin home searching, focus on what features you really want against what you can live with or without. For instance, ask yourself questions like do you want a three-bedroom home with an attached garage and basement? Do you want to be in a certain school district or near your job? Sites like Realtor, Zillow, and Trulia, and others can help with that research.

The post Good Sign for Buyers: Housing Inventory Growing Again appeared first on Black Enterprise.

Money | Black Enterprise

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Good Sign for Buyers: Housing Inventory Growing Again

The growth is potentially a big deal for homebuyers for multiple reasons. As inventory grows, buyers have a wider selection of homes to choose from. More homes for sale can help reduce bidding battles among buyers for a home purchase. And higher housing supply may put more pressure on sellers to cut listing prices.

There were 3% more homes for sale nationally in October than the same time a year ago, according to a new report. The online real estate firm Zillow reported inventory fell for 44 straight months on an annual basis before realizing the uptick. A 1% jump in inventory in September spurred a greater gain in October, a possible sign of future gains in available inventory.

The surges came after inventory declined last October at a 10.2% annual pace. Expensive markets that were among the nation’s hottest saw some of the biggest inventory gains. Take San Jose, California. It had the biggest annual inventory jump, adding about 1,500 homes to boost inventory by 93.1% from last October. San Diego, San Francisco, and Seattle also experienced the greatest increases in the number of houses for sale.

Still, rising mortgage rates could dampen the rising housing stock if the higher rates scare off potential buyers.

“In yet another sign that the housing market is cooling, we’re finally starting to see inventory return after several years of annual declines,”  Zillow Senior Economist Aaron Terrazas stated in a press release. “The combination of tight supply and strong demand have pushed up home values in recent years, but markets always ebb and flow and there is no doubt that the tides that have buoyed sellers are shifting.”

Terrazas added, “Buyers are not out of the woods yet: While there are more homes for sale, rising mortgage rates are quickly eating into what they can afford to pay. First-time buyers have benefited from flat or falling rents over the past year—making it somewhat easier to save for a down payment—but the decline in rents could be short-lived if higher buying costs push some people back toward the rental market.”

On the home appreciation front, Zillow reported median home value nationally at $ 221,500, up 7% from this time last year. The median rent is $ 1,442, down 0.1% ($ 1 per month) year-over-year, the second straight month of annual rent declines.

But before purchasing a home, here are some tips for buyers to consider:

  • Identify a realtor to work with that’s in your area. Real estate agents can offer helpful insights, including disclosing how fast homes are selling and for what price. They often can help you negotiate a price to make your offer stand out over others. To find an agent in your area, enter your zip code at www.realtor.com/realestateagents
  • Know your budget and stick to it. Before you even start shopping, figure out what you can afford to spend by receiving a pre-approval from a lender to learn the amount of money you’re qualified to borrow. When determining your final budget, examine other costs of homeownership, including property taxes, insurance, and utilities. If listings are scarce in your market, home prices are likely to rise as bidding for available houses drive them up.
  • Avoid cases where you are competing against other buyers and counteroffering over what you can actually afford. Don’t be afraid to back off if the price exceeds your budget.
  • Identify needs versus wants.

As you begin home searching, focus on what features you really want against what you can live with or without. For instance, ask yourself questions like do you want a three-bedroom home with an attached garage and basement? Do you want to be in a certain school district or near your job? Sites like Realtor, Zillow, and Trulia, and others can help with that research.

The post Good Sign for Buyers: Housing Inventory Growing Again appeared first on Black Enterprise.

Money | Black Enterprise

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