What Kind Of A Market Are You In

(Although the housing market seems to be slowing all across the nation, every individual area has its own different housing trends. A city in one end of a state could be fairing much better or worse than a city a few hours away. )

It all depends on supply and demand and the level of price appreciation the area experienced during the housing boom from about 2000-20005.

Knowing and understanding what kind of real estate market you are in can help you make informed decisions and save you a lot of money in the long run regardless if you are buying, selling or just staying put.

A housing market can usually be described in three ways: a buyer’s market, seller’s market or a neutral market.

A November 24, 2006 article by Elizabeth Weintraub of about.com, “Is your real estate market hot, cold or neutral?” discusses how to determine which market is which.

“When most people set out to buy or sell, they're not wondering about whether it's a seller's or a buyer's market; they're thinking about their own needs, about buying or selling. Moreover, sometimes agents, in their rush to grab a listing or sign up that buyer on a buyer's broker agreement, don't talk about the marketplace or educate their clients.”

“One of the first steps any serious seller or buyer should make is to determine the temperature in the marketplace. Is it hot, cold or neutral? It can mean a world of difference regarding your bottom line because your negotiation tactics will be polar opposites in opposing markets. The way you make money in a seller's market would lose you money in a buyer's market. Being uninformed about markets could cost you big time.”

Right now, most of the markets across the country are buyer’s markets (also known as cold markets). This is the best time for anyone to buy a home because not only are you going to get better prices, but there is also a surplus of homes available on the market to choose from.

“In a cold real estate market, serious sellers are often willing to negotiate. This means you can probably buy a home for less than list price, and the seller might be willing to pay some or all of your closing costs.”

Here are some signs of a buyer’s market: “Inventory is high as compared to previous months / years. More than six months of inventory is on the market. Comparable sale prices are higher than active listing prices. Fewer buyers are purchasing, resulting in lower closed sale numbers.”

In a seller’s market (or hot market), things are in favor of those looking to sell homes. Serious buyers are willing to pay increased prices and homes typically do not stay on the market for very long.

A neutral market is a bit different from the buyer’s and seller’s markets described above.

“These markets are balanced. Typically, interest rates are affordable and the number of buyers and sellers in the marketplace are equalized. The scales don't tip in either direction, meaning the market is normal without experiencing volatile swings.”

Signs of a neutral market: “Inventory is normal as compared to previous normal months / years. Two to four months of inventory is on the market. Comparable sale prices are close to active listing prices. Sales numbers have stabilized. Median sales prices are flattened.”

Use these tips to determine if the market in your area is a buyer’s, seller’s or neutral.

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