Have you ever wondered how a real estate professional knows if they’re in a seller’s market or a buyer’s market? Find out right here.
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How do agents determine if it’s a buyer’s or a seller’s market?
We do this by looking at the inventory of homes for sale in the market. Let’s say that no more homes came on the market for 30 days—to determine the type of market we’re in, we’d look at how long it would take to sell every single home that is currently available and has been on the market for a while. That’s called the attrition rate.
If it would take six months or fewer to sell everything that’s available now, we would deem the market to be a seller’s market. Right now in many areas across Tennessee, we’re seeing between one and three months of inventory available.
However, there are some areas where we’re seeing inventory increasing. Does that mean we’ll instantly deem it a buyer’s market? No—typically, if there are five to six months of inventory available, that’s more of a balanced market that is fair to both buyers and sellers.
The type of market does make a difference in the price you’d sell a home for and/or the price you’d offer on a home you wanted to buy.
If it would take six months or fewer to sell everything that’s available now, we would deem the market to be a buyer’s market.
Home sales tend to slow down from the top of the price range on down. For example, $750,000-home sales will begin to slow down before, say, $350,000-home sales. As the market slows down, we usually begin to see incentives being offered by the sellers of more expensive homes. As a market comes back to life and transitions to more of a seller’s market, we see boosted activity around the cheaper homes, and the market begins to grow from the bottom on up. Why? Because the sellers of, say $100,000 homes, will then turn around and buy more expensive homes.
Currently, our market is a seller’s market, but we’re beginning to see fewer multiple-offer situations on homes and more price adjustments/incentives. These are signs that the market is shifting from a full-blown seller’s market to one that favors buyers a little more.
Whether you’re buying or selling, ask your agent what kind of market you’re currently in. Your real estate professional should know this, since it does make a difference in the price you’d sell a home for and/or the price you’d offer on a home you wanted to buy.
The Charlotte Mabry Team is full of buying and listing specialists who really understand the market and can get you the best deal depending on which side of the spectrum you’re on. We would love to speak with you! All you have to do is reach out to us, and one of our specialists will be in touch with you.
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