The Turn Towards a Buyer’s Market
Real estate is one of the most unpredictable business areas. The market is prone to fluctuation, thus making investing in a home a risky affair. Ascertaining the reason behind the rise and fall of the prices is always a difficult task. Sometimes, even informed analysts are caught unaware.
A buyer’s market is said to occur when the housing market favors the home buyers. Parameters such as price range play a big part in defining the market. A buyer’s market is characterized by long periods of waiting for a suitable buyer.
Keep reading to get insights on why and how the housing market is shifting to a buyer’s market.
There Are More Homes Than Buyers in the Market
Real estate continues to be one of the most lucrative businesses worldwide. It is, however, becoming more challenging due to the high numbers of investors in the field. Contractors and real estate specialists have recently built more homes to meet the growing demand. Home construction has grown at an exponential rate, yet the market is the same. Currently, there is a shift in the market because there are more homes than buyers.
As a buyer, this is the best thing that could have happened to you. That fact that there are more houses means that you’ve got more power than the sellers of those homes. The created buyer’s markets gift you with a chance of a lifetime. This period is the prime time for you to become a proud homeowner. Do not let this once in a lifetime chance escape. Since there are more homes than buyers, sellers will have to lower their prices.
The Increased Supply of Homes Is Leading to Price Drop
Rules of demand and supply dictate that when there is high demand, the prices rise. On the other hand, more supply with less demand leads to the lowering of rates. This is the same thing happening in the real estate world. The quantity of homes for going on the market for sale surpasses the number of homes being purchased. Interestingly, more homes are under construction, and they will enter the same squeezed market. The increasing numbers of homes shift the market to the buyer.
As a buyer, this is probably the best scenario for which you can hope. The increasing numbers directly translate to lower prices. Use this buyer’s market to your advantage. Work with your realtor to demand a lower price because, at the end of it all, you have other options.
Houses Sit Unsold For a Long Time
Finding a suitable buyer for a particular home has now proved to be complicated. Homes are going for more extended periods without occupation. Unrealistic demands by the home sellers fuel this level of vacancy. The real owners of these homes do not benefit when the homes sit unsold. They even have loans to service, which makes the situation dangerous. It is such factors that are leading to a shift towards a buyer’s market. The sellers have no other option but to give in to the demands of the buyers.
Never rush to buy a home. Let it sit there unsold, and one day, the sellers will get back to you with reasonable prices.
Buyers Have More Choices
The presence of multiple choices for the buyers is a prominent feature in a buyer’s market. The excess construction means that there is a variety of houses for the buyers to pick. The buyer has more power here in that they may opt to go for multiple homes before settling on one. A buyer’s market pressures the seller by threatening to move on to the next property. Similar to other cases, the increased number of homes is the force behind it.
Mortgages Are No Longer Enticing
A recent survey has shown that despite the mortgages hitting a three-year low, buyers are not as interested. Financing institutions no longer attract customers using this particular metric. Mortgages are mainly triggered by the pressures brought about by competition. The fact that there is no competition means that aspiring home buyers are in no hurry to own these homes.
What this means is that a buyer’s market does not require much of the mortgages. After all, the current real estate situation has given room for more negotiations leading to lower prices.
A buyer’s market is a great joy to the buyer but a challenge for the seller. Buyers should enjoy the situation and hope that it lasts a little bit longer.
About Transition Realty
Transition Realty owner Steve Lehmeyer specializes in helping people manage real estate transactions in the Minneapolis/St. Paul area. His experience in the Minnesota real estate market spans 20 years. Steve and his team work with clients to buy & sell single-family homes, townhouses, condos, lake homes, and investment property. Download a free home search app for your smartphone or search the MLS at TransitionRealty.com.