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Is the seller’s real estate market a buyer’s market? The straight answer is YES, the seller’s real estate market has become a buyer’s market!

There are many reasons for this phenomenon, but the main one is that buyers can no longer rely on their down payment. With low-interest rates and months-long waits for financing, sellers are able to negotiate more favorable terms. The other reason buyers have fewer opportunities is the current economic slump that is going on in America.

First, let’s know what the seller’s real estate market and buyer’s real estate market are to get to have a deep understanding of each market.

Seller’s Real Estate Market

In the real estate market, when the demand for houses outstrips the supply of houses, this is called a sellers’ market. Usually when there are more sellers than buyers; the lower prices will be and this could lead to an increase in property values. Sellers have increased margins to offer their properties on the market, making it a buyer’s market and buyers have less time (and money) to look for other options.

This has made it possible for sellers who have an attractive property to negotiating better terms with potential buyers. There is a higher number of buyers all around the country but buyers always find ways to cope with the drop in real estate prices and sellers tend to view this as a sign of more demand, instead of a significant drop.

The Better Terms

With low-interest rates, longer financing terms, and parking fees that are waived as a way to entice potential buyers, there is no wonder that things have become easier for individuals who want to sell a home. Buyers are able to pay more than they originally thought they would and sellers are getting better deals than expected.

Buyer’s Real Estate Market

In the real estate market, when the demand for houses is less than the supply of houses, this is called a buyers’ market. When there are fewer homes available and more people who are looking to buy a home at the same time, these homebuyers have more negotiating power over home sellers.

In this tough economic climate, prospective homeowners have less money to spend on their mortgages or down payments. There are many sales and promotions going on that help first-time buyers; however, these promotions can be utilized to the advantage of sellers as well.

Has The Seller’s Real Estate Market Become Buyer’s Market?

The real estate market in the United States has exhibited less growth in recent years from its peak in mid-2007. The traditional pattern has been that home prices increase at a faster pace than personal incomes. The ratio of price to income for the median home sold each quarter was about 1.35 at its peak, higher than we ever saw historically until recently.

Incomes rose at an even faster rate, by about 2 percent every year since 1965, and house prices increased accordingly, by an average of 3.5 percent per year after 1967. Since the recent recession, income has increased by half of that, the average percentage is decreased.

The ratio of price to income has recently dropped to around 1.0, even lower than the record low level achieved when we had the bubble economy in 2006. This is a record low for the median home price-to-income ratio for all housing cycles since 1954. The price-to-income ratio is a measure of the affordability of homes, and it suggests that current home prices are at replacement costs.

The Major Cause For Seller’s Real Estate Market To Become Buyer’s Market

The major cause for the seller’s real estate market to become a buyer’s market is that first-time buyers can’t afford to house any longer. As the current real estate price drop and the economic downturn continue, first-time buyers are struggling more than ever before due to limited funds for down payments, payments for college tuition, and other expenses. Increasingly, first-time buyers find themselves having to take on more debt to purchase homes.

Conclusion

As the U.S. real estate market moves into a buyer’s market, it is important to remember that the real estate market is only as good as buyers’ ability to pay for it and sellers’ ability to provide a bargain. Buyers are less able now to get financing and more pricing power in negotiations, while sellers have increased margins available to them on their properties, which causes the seller’s real estate market to become a buyer’s market.

If you are in need of a real estate broker in Washington or in the surrounding areas of Redmond, Bellevue, Sammamish, Monroe, and Kirkland, we got you covered. Contact us to hire us!!