What is a "Seller's Market"

January 6, 2018

The "Seller's Market"

So what is a 'Seller's Market"?  Fair question, let me explain.  When people refer to the market as "a seller's market" they are referring to the current set of circumstances that drive real estate sales as favoring the seller.  In a typical sellers market, inventory of available homes is low, there is high demand for the limited homes for sale, and sellers are in the position to demand higher prices than in a "balanced" market.  Because of this, it is referred to as a "Seller's Market".

 

Like Politics, All Real Estate is Local

Real estate markets are local.  What happens in Savannah is different than what happens in Bluffton, Brunswick, or Kingsland.  Each area has its own unique set of pressures.  Never presume a favorable market for sellers is universal - it may be good for sellers in Savannah but not so good in St. Simon's Island.  This is also sensitive to price range.  If your home is valued below the average home value of $230,000 in Savannah, you are in a great position.  The lower you go on the price scale, the greater number of buyers exist.

 

What is a "Balanced" Market?

A "Balanced Market" is historically referred to as reasonable demand on a reasonable inventory of homes.  We use "absorption rate" to measure what might be reasonable.  For instance, if there are a known number of homes being sold in the last month, and it would take 6 months to work through that inventory, then we could say the market is "balanced".  A market with less than 6 months of inventory is traditionally referred to as a Sellers Market, and more than 6 months of inventory is referred to as a "Buyers market".

 

 

All this being said, it is possible to have a Sellers Market in the lower price ranges while at the same time have a Buyers market in the upper price ranges.

 

A Double Edged Sword

The one thing to remember for the Sellers in the "Sellers Market" is they may demand top dollar for their homes when they sell, but then have to deal with the reality of that same market when they buy their new home.  Seller's markets and Buyers markets in the end are typically double edged swords - which is why THIS Realtor prefers balance.

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