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Understanding Today's Trend – Is It a Buyer’s Market?

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By : Fredrica Smith    99 or more times read
One way to enjoy a profitable real estate transaction is to primarily be aware of the type of market present in the area you want to purchase or sell a property. There are two general trends that occur in majority of markets – the buyer’s and seller’s markets. While there are many factors that would indicate which one is at hand, the basic way to differentiate one from the other is according to the proportion of supply (houses) and demand (purchase offers). The question begs – which market is prevalent today?

Numerous reports from listing services, realtor associations, real estate data analysts and economists have revealed a massive quantity of unsold homes, which were stagnant for more than 6 months in various markets all over the country. This information is the primary indicator of a buyer’s market, wherein there is an overflow of properties and deficiency of buyers. The given time frame is another sign of the mentioned market type. In a typical market, properties only take about 2 to 5 months before they get sold.

The decline in home prices is also a factor that leads to labeling today’s real estate condition under the buyer’s market. Home prices were down 5% as of November last year. Key players of the industry and of the financing sector have also predicted the worst price decline is yet to come. For one, Kings County may have to deal with as low as a 29% decrease this year. Such falling prices are brought about by the upsurge of properties for sale. Sellers would then have to be competitive in pricing, thus, pulling the small number of buyers in all directions.

Note that there are correlated factors that cause the surplus of homes. One of which would be unemployment. Recent economic downturn has impacted many industries, which enforced company owners to undergo retrenchment and immense lay offs. A lot of individuals and families suddenly lost their income. Thus, such monetary deficiency led them to either fall behind their mortgage payments resulting to foreclosure or sell their homes in order to gain some finances. Another offshoot from the lack of suitable income is that there were fewer people viable to purchase a home.

Another aspect that results to the excessive number of homes vis-à-vis asking price decline is the season-based buying activity. Many locations went through slower sales during the winter time. Home owners were also enforced to sell their properties for a significantly lower price than they would on a given busier time. On the other hand, spring time is not an exception to this trend. It has been evident that buyer activity picks up this period as there are more families that purchase homes in time for the summer vacation. But the some areas have recently experienced otherwise – more homes stayed unsold and price declines continued.

Even the condition of the environment may be a contributing factor to the buyer’s market. Due to today’s noticeable ecological imbalance, natural disasters unexpectedly hit many cities. Calamity-stricken areas take years to recover. Properties are destroyed, thus their values decrease. Once again, hopeful sellers would have to reduce their asking prices lower than those in regular markets.

The buyer’s market would not be called as such if it is not primarily to the advantage of the buyers. Thus sellers must be more cautious in engaging in any transaction today. If you are in a must-sell position, there are ways to avert from total loss. One thing you could do is to determine how low a price you can permit. Another is to prepare your home at its best condition so as buyers would be willing to put down a relatively substantial offer. Lastly, advertise your property in as many venues possible such as newspaper ads, listings or social networking sites.

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