The housing market has two basic sides...

 

 

A buyers market and a sellers market. Supply and demand are the basic principals that determine which market is current. If many people are trying to buy homes and there are not enough homes listed to meet those needs, it is a sellers market. If there are many homes listed but only a few home buyers, it becomes a buyers market. For about the last three years we have been in a sellers market.

A sellers market means that in the transaction of buying or selling a home, the seller has more leverage. This means that the buyer can expect tougher competition when offering a contract on a property. Sellers are less likely to help with closing costs and can become more selective as to which contract is accepted. It is common for contract offers to exceed the asking price. In a buyers market, it is the buyer who has the leverage.

Generally speaking, in a buyers market, buyers can be more demanding when offering a contract on a property. It is common for buyers to ask for financial help at closing or place demands on the property, such as painting a room or replacing carpet. Many factors can determine which side of supply and demand the market will fall on. As an example, over the last three years interest rates on home mortgages were at record lows. People could afford upwards of 20% more home then in years before. So many people look to take advantage by upgrading their home. Some geographic factors also determine if it is a sellers market or a buyers market.

These areas tend to stay in one market or the other. As an example, if there is a very sought after community that is centrally located on a commuter route, the market in that area may always be a sellers market. On the flip side, if a community is located by an airport, people may be less attracted to that particular community, which would generate less supply of buyers. The market basically boils down to how much people are able and willing to spend on a home. The market value of a home is based not on an appraisal or on how much a property was initially purchased at, but rather how much someone is currently willing to pay.