In the real estate industry, a buyer's market is when there is a surplus of homes for sale and a shortage of buyer demand. Buyers can take advantage of buyer's market conditions to their advantage and negotiate lower sales prices if they know what steps to take. On the other hand, well-prepared sellers may need to offer incentives and advantages to get ahead in the buyer's market. Therefore, in a buyer's market, the cost of goods is low, but it's harder to find a buyer and not all goods are sold.
Those looking to buy a home are better positioned to get what they want when there are more homes on the market than there are buyers. Homes tend to stay on the market longer when this occurs, and sellers must work harder to attract the interest of buyers. The term buyer's market is commonly used to describe real estate markets, but it applies to any type of market where there are more products available than people who want to buy them. A buyer's market occurs when there are more properties for sale than there are buyers to buy.
On the other hand, seller's markets are characterized by a smaller number of homes for sale and a high number of buyers who want to make a purchase. A buyer's market occurs when there is an oversupply of a good or service and, therefore, lower prices. The average time a home stays in the buyer's market is longer than during the seller's market. Buyer and seller markets work in cycles; each will inevitably and eventually give way to the other.
The opposite of the buyer's market is the seller's market, a situation in which changes in the factors that drive supply and demand give sellers an advantage over buyers in price negotiations. Depending on the trends affecting the real estate market (we'll talk about them later), buyer markets can occur domestically or in localized bubbles. During the housing bubble of the early to mid-2000s, the housing market was considered to be a seller's market. The subsequent fall in the real estate market created a buyer's market in which the seller had to work much harder to generate interest in their property.
