A buyer’s market occurs when an asset’s supply exceeds demand, driving down prices and limiting sellers’ negotiating power.
During a buyer’s market, supply exceeds demand, giving buyers more control over pricing and terms. It’s the opposite of a seller’s market, when low supply and high demand hands power to sellers instead.
While buyer’s markets can crop up in any market, they’re generally associated with real estate. Buyer’s market conditions are generally characterized by features like:
As a result, sellers are more likely to compete for buyers by offering concessions, extra repairs or lower asking prices. By contrast, buyers may spend more time seeking their ideal amenities.
Potential causes of buyer’s markets include:
The years leading up to the 2008 housing market crash were considered a seller’s market due to low supply and high prices. But after the asset bubble burst, a buyer’s market moved in as sellers lost their negotiating power.
Buyers began demanding more concessions and homes in better condition. Meanwhile, sellers struggled to shed properties due to weak demand and rampant foreclosures driving down prices.
Buyer’s markets impact buyers and sellers in different ways. Understanding the right preparations makes all the difference in coming out on top.
Watching housing market trends is crucial to getting the most out of your end of the bargain. As a buyer, buyer’s markets offer a chance to benefit from excess supply and decreased competition. But selling a high-supply, low-demand market means you may not achieve the profits you hope to see.
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