Whether you are a first-time homebuyer or just in the market to buy or sell a home, it is key to know about the important things that go on in the real estate market. The conditions of the real estate market can often help determine the types of challenges you would face as either a buyer or seller as well as any advantages. Continue reading below to learn more about what the difference is between a seller’s market and a buyer’s market in the real estate world and what these conditions mean for you as a buyer and/or seller.
Things That Impact The Market
There are many factors that can influence the conditions in your local market. Here are some of the most common factors to consider:
A low interest rate makes buying easier, giving buyers the ability to afford a larger mortgage amount for the same payment. Alternatively, higher interest rates have the opposite effect. However, it is important to note that buyers who are obtaining a mortgage through federally regulated entities (banks and sometimes other lenders) will still require applicants to pass a mortgage stress test. As of June 1st, 2021 buyers are required to qualify at a rate of 5.25% or 2% over the negotiated interest rate (whichever is higher). Learn more about the mortgage stress test by visiting the Government of Canada website.
Real estate markets can vary drastically across the country, regions and even cities due to the connection between the real estate market and the local and global economy. Market conditions tend to coincide with economic activity, as economies slow down and consumer confidence decreases there is less demand from buyers for many things in the economy including homes. Alternatively, when the economy is on an upswing and consumer confidence is high they are more likely to spend money. Employment rates are an example of a large factor related to both the economy and the real estate market.
Government Rebates and Incentives Programs
The government of Canada offers many different incentives and rebate programs that make it easier for buyers to attain homeownership. Some of these incentives include the Home Buyers’ Plan (HBP) and First-Time Home Buyers Incentive and some rebate programs include Home Buyers’ Amount Tax Credit and the GST/HST New Housing Rebate.
There are many other factors that can play a role in the conditions of a market including demographics, construction and more.
What Is A Seller’s Market?
Put simply, a seller’s market benefits the sellers. It takes place when there are more buyers than available homes on the market. When demand is higher than the supply it naturally leads to a shortage of homes and an increase in price. Below are some of the other key characteristics of a seller’s market.
Characteristics Of A Seller’s Market
- More buyers than homes (shortage of homes)
- Sellers have control
- Rising home prices
- Bidding wars/ multiple offers on properties
- Homes sell quickly
- Homes are sold at, or more often, over the asking price
- Fewer conditions on offers
What Is A Buyer’s Market?
A buyer’s market put simply, benefits the buyers. This type of market condition takes place when there are more homes available on the market than interested buyers. When supply is higher than demand it leads to an excess of available homes and lower prices in the market. Here are some of the main characteristics of a buyer’s market in real estate:
Characteristics Of A Buyer’s Market
- More homes than buyers (surplus of homes)
- Buyers have control (leverage over sellers)
- Falling home prices
- Homes are on the market for longer
- Homes sell at, or more often, under the asking price
- Sellers are more likely to accept conditions as part of the sale (making repairs prior to closing, home sale contingencies)
What Is A Balanced Market?
A balanced market is when the supply and demand in the local real estate market are even. Essentially, there is a healthy, balanced number of buyers and homes on the market. Homes sit on the market for an average amount of time and are priced reasonably, they tend to sell close to the listing price. This is a great time for both buyers and sellers.
How to Determine If It’s A Buyer’s or Seller’s Market
When it comes to buying or selling your home, the type of market you’re in can make a huge difference. If you have the flexibility, you can save yourself thousands and thousands of dollars by strategically choosing the market in which you buy or sell your home. Take a look at some of the tips below for determining what the current market condition are in your area.
Contact A Local Real Estate Agent
By talking to an experienced local real estate agent, you can feel confident knowing that you have access to the most up-to-date and relevant information for your goals. Real estate agents can not only help you decide what the best time is to sell or buy a home but can also help you navigate the market if the conditions are less than ideal (an example is buying in a seller’s market).
If you have ever looked at the real estate market before, you may have an idea of what amount of inventory is typical for your area. By looking at the current inventory you can get a feel for the type of market you may be in. If there are many homes to choose from you are likely in a buyer’s market. Alternatively, if there are very few homes to choose from you are probably in a seller’s market.
Length of Time on Market
Similar to the above, you can observe how long the available listings have been on the market. If the majority of listings have been on the market for a short period of time, it is likely that you are in a seller’s market. If the majority of listings have been on the market for an average amount of time or longer, you could be in a buyer’s market. Be sure to pay attention to unique situations as some homes may not sell for obvious reasons, even in a seller’s market.
Looking To Buy A Home in The Niagara Region? Call Davids & DeLaat!
If you are looking to either buy or sell a home in Niagara Region, we can help. At Davids & DeLaat we understand that it’s not always possible for buyers and sellers to wait to take advantage of the opportune markets. We can help you not only determine what the current market conditions are but help you create and execute a plan for buying and/or selling your home in any market. Contact Davids & DeLaat today today to get started with your real estate journey!