A seller’s market is a market where there are more buyers than sellers. In this market, sellers keep prices high because of high demand. As a result, competition gets created among buyers. Since there is a shortage of homes on the market, you will end up with many buyers outbidding each other on the same property. This is the opposite of a buyer’s market.
How do you know when you are in a seller’s market?
Whenever there are fewer houses on the market in relation to buyers, prices will go up. This is due to competition between buyers on a few properties available. Therefore, sellers will accept the highest offers. Seller’s market is characterized by the following:
- Houses sell for much higher than their actual values
- Houses do not last long on the market
- Number of buyers increases (sometimes)
- Number of sellers decreases (sometimes)
Homes and other properties appreciate in seller’s markets.
Causes of seller’s market
In general, a seller’s market is due to a shortage of houses on the market. What causes a shortage?
The shortage of properties can be caused by seasons, less development of new properties in the area, the discovery of natural resources such as oil and gas, etc.
All these conditions would result in a sudden increase of buyers without an equal number of houses to sustain the demand.
Economic conditions also increase the number of buyers. When the economy is booming, many people will want to invest in real estate.
Why? People think they will be able to pay off their mortgages because of stable employments. Investors also follow the same trend.
Should you invest your money in a seller’s market?
It depends on who you are. If you are a seller, you should always sell during a seller’s market. This is the time you will make the most money on your property because of the competition among buyers.
However, if you are a buyer, stay away from investing your money in a seller’s market. You will end up paying more money than the property is worth.
