We hear so much today about the current Sacramento real estate market being a "buyer's market." In fact, most markets throughout the country are considered buyers markets. But many people, even though they may know the market favors buyers, don't truly know what makes a market a buyer's market.
Don't worry, it's quite simple. As we've all heard, basic economics discusses "supply and demand," and a marketplace - any marketplace - is fairly balanced when supply and demand are equal, or at least close to equal.
A BUYER'S MARKET is simply when the supply outweighs demand. In other words, in real estate, when there are more homes on the market and not enough buyers to buy all those homes, it's a buyer's market. Why? Because the buyer's are in control. When there are so many homes on the market, and all the sellers are trying to compete for so few buyers, sellers must price their homes LOW to effectively compete in the marketplace. In turn, because there is so much to choose from, buyers can be choosy and take their time to find the best deal. If a seller is not willing to negotiate down to what a buyer wants, then the buyer goes elsewhere.
A buyer's market means the buyers are in control. It's the opposite of what we experienced from 2000 thru 2005 when sellers were in control. In that market, a SELLER'S MARKET, demand exceeded supply - more buyers, fewer homes. So prices went up.
What goes up must come down, and we're experiencing the downward side of the real estate cycle. It happens in all markets. So, if you're a buyer, it's truly a great time to buy a home. Prices are low, inventories are high, and interest rates are low. These three factors make this a phenomenal buying opportunity. The cycle will continue and it will eventually be a seller's market again. When? While nobody truly knows for sure, read my post on some quick thoughts on the market.
Other posts to read:
Comments