Buying a Home in a Seller’s Market
Let the bidding wars begin. You may have seen it for yourself, a “for sale” sign up one day and an “under contract” sign the next. America’s housing market is booming. If you’re in the process of house hunting, you’ve quickly realized that this is a seller’s market. Whether you’re listing your home or considering buying, it’s important to understand the current market standings.
What exactly is a “seller’s market” anyway?
A seller’s market is characterized by a shortage of goods that are available for sale. Because of the shortage of goods, or in this case, homes, the seller now has the upper hand to dictate the price. Basically, low supply has met high demand. On the other hand, a “buyer’s market” is when there is a higher inventory of homes on the market compared to interested buyers. In this market type, buyers have more negotiating power since the sellers are competing.
3 Signs of a Seller’s Market:
- Inventory: Fewer homes on the market may be a sign that you’re in a seller’s market. Not sure if the real estate inventory in your area has decreased? Try calculating to see if the number of currently listed homes is less than half of the number of homes sold the previous month. If so, you’re likely in a seller’s market.
- Higher Prices: Sellers often drop prices to compete in a buyer’s market, but in a seller’s market when buyers are competing, sellers may be able to sell for higher than the asking price.
- Time on Market: It’s no secret that homes sell faster in a seller’s market and they tend to stay on the market longer in a buyer’s market.
What causes a seller’s market?
- Record-low mortgage rates. In January 2021, rates on the 30-year fixed-rate mortgage hit a record low at 2.65%.
- Low Supply. Home building has not quite kept up with the growing population and demand, and as Millennials reach the home-buying age, the supply shortage deepens.
- Technology expediting sales. With the pandemic sparking digital mortgage approvals and virtual closings, the speed at which homes are sold has increased.
Don’t let this stop you from buying the home of your dreams.
As you begin your home buying process, don’t let the current market standings discourage you! Keep in mind that you might need to be patient if you lose a house you wanted, and don’t let it get you down. It’s also important to act fast and go in prepared. Get your pre-approval letter from your mortgage company to show sellers you’re a serious buyer. If you find a home that meets your requirements, act as quickly as possible.
Work with trustworthy agents.
As the housing market is ever-changing, it’s crucial to partner with trustworthy sellers and agents, like our agents here at Points West Agency. Our agents are ready to help you find the home of your dreams, so visit our Contact Us page or give us a call at (817) 717-6036 to get the process started.