Buyer's Market vs. Seller's Market Explained
There’s been a lot of talk about the real estate market cooling down, and it has. There are more homes on the market and buyer demand is slowing. However, that is compared to the ultra extreme seller’s market we’ve been seeing for the past 2 years. So you might be wondering if now is still a good time to sell. Let’s break it down.
What is a Seller’s Market?
In a seller’s market, there are more buyers in the market than there are homes available for sale. That gives the seller an advantage because with so much competition, buyers are more willing to offer above asking price or waive contingencies like inspections to make their offer stand out over others. We see a lot of bidding wars in a seller’s market and the average number of offers on a home is high. According to NAR, in the past few months we have seen the average number of offers on a home decrease. However, it’s still multiple offers. So the competition is still there, it’s just not as drastic as it was several months ago. This is an average and it varies from home to home, however, it’s still gives us a good idea of the overall market. With a little less competition in the market, that makes it more appealing for buyers to start their home search. So the demand is certainly still there, we’re just heading closer toward a neutral market.
What is a Buyer’s Market?
In a buyer’s market, there are more homes for sale than there are buyers looking to purchase a home. This means that buyers have the advantage because sellers are willing to compromise so they can sell the house. This might mean accepting an offer below asking price, accepting more contingencies, providing money towards the closing costs, doing repairs etc. Based on ShowingTime data in Philadephia, the number of showings is slowing decreasing, which tells us buyer demand is cooling off. However, that does not mean it is coming to a halt or hitting extreme low levels. It’s just heading towards a more neutral level than what we’ve seen for the past few years. So while the buyer demand is decreasing, it is still there and we are not currently in a buyer’s market. We are shifting slowly towards a neutral market.
What is a Neutral Market?
In a neutral market, everything is balanced. There are enough homes to meet buyer demand and one does not significantly outweigh the other. A neutral market would help to correct the extremities that we have seen in recent years. We are slowly trending towards that in Philadelphia. Home inventory is steadily increasing each month. Buyer demand is steadily decreasing each month. In real estate, things can change very quickly. This is the trend we are seeing as of August 2022, but there are a number of factors that can affect this and we will continue to bring you updates as it unfolds.
Is it a Good Time to Sell in Philadelphia?
Currently, the conditions are still favoring sellers even though the market is slowing down. We have become used to seeing homes flying off the market in the first 24 hours of being listed in recent years. So it’s easy to think that if your home doesn’t sell that quickly now that you missed the market or that it’s not the right time to sell. However, this is still a good time to sell, it just might take a little bit longer than it would have 6 months ago. The most important thing when selling your house is making sure you are working with an agent who will help you price your house at market value. Pricing your home in the market is extremely important and will determine the amount of showing activity on your home.
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