One of the biggest questions of 2019 is whether it’s currently a buyer’s or a seller’s market. This is one of the most debated questions in real estate, and sometimes it’s hard to define a single, clear answer.
So which is it this year? Due to a number of factors, it’s most likely a buyer’s market in real estate. Is this a good thing? What’s caused the tides to turn in favor of homebuyers? This guide will not only explain the logic behind this year’s buyer’s market, but it will also discuss what that means for both buyers and sellers in the next few months.
What is a Buyer’s vs. Seller’s Market?
First, let’s define what it means when we say it’s a “buyer’s market” or it’s a “seller’s market.” These are more than just buzz words. In the case of a buyer’s market, this is when the supply exceeds the demand. In other words, there are more properties for sale than there are people looking to buy them. This usually means prices for homes are down.
On the other hand, a seller’s market means there are fewer properties for sale and more buyers looking to make a purchase. This means prices are more likely to rise, especially in competitive markets. Multiple buyers will likely be interested in a single property, and homes are more prone to bidding wars. The seller has the advantage in this situation.
Why Are We’re in a Buyer’s Market?
Now that we’ve established what a buyer’s market is, what’s caused it this year? While home prices are still relatively high, especially in high-demand markets, they’re slowly on the decline. Home values are down 5% this year as opposed to last year, and that’s driving the price down with it.
Another thing that’s playing a large role in the current market is the rise in mortgage rates recently. This rise in rates has reduced buyer affordability, so fewer people are currently searching the market for a new home.
Last but not least, there’s simply more supply. More listings are coming out than in past years, and the demand isn’t meeting this number. This means many sellers are going months or more without any interested buyers. Meanwhile, buyers have more options and room to negotiate.
What Does the Buyer’s Economy Mean?
What exactly does this buyer’s market mean for the economy and the housing market? Frankly, it’s a sign that the economy might not be doing so well. When the economy is thriving, people feel more encouraged to buy homes. They feel stable in their decision.
The fact that fewer people are buying homes today only indicates that they lack this confidence in the housing market and the economy in general. Much of this is due to lingering feelings of the housing market crash of 2008, but it’s also due to the rising costs of living in all parts of the country.
While new generations are slowly but surely entering the homebuying market, many are holding off on such a big purchase. Rising student loan debt and the struggle to find affordable housing in cities is keeping Millennials from purchasing homes.
Ultimately, the buyer’s market says a lot about the country we live in today. However, don’t put too much weight on this label. Depending on where exactly you live, it might still be a great time to sell a home. Similarly, you might be able to snag quite the deal if you’re currently shopping around for your next home. Like most things in the real estate market, tides change quickly. It’s a buyer’s market today, but there’s no guarantee this will continue next year.