Seller’s or Buyer’s Market?

We often hear words “buyers” and “markets” when referring to the real estate market. The real estate market, whether it’s the priority of a seller or buyer, is determined by the ratio of demand for real estate with the supply of real estate over a certain period of time. Inflation, economic growth, employment can influence the dynamics of the housing market and situation whether it is buyer or a seller’s advantage. 

Buyer’s market

Seller’s market
Seller’s market

Housing processes have more advantages to buyers when the offer exceeds demand. In this case the seller must sell to the buyer at affordable prices. Therefore the demand for houses falls. When the implements arise, prices fall down. It is called the buyer’s market because consequently buyers have more control and they may demand lower prices. If the seller wants to sell in the buyer’s market, they must adapt to the requirements of the buyer in that very period of time.

On the contrary, a situation when demand is above supply is beneficial to sellers. When demand exceeds supply, sellers have greater control over set prices and terms. In the seller’s market, they sell their assets, goods or services to the buyer who pays the highest price. In the real estate buyer’s market there are more buyers than sellers, and you will usually see a situation where several buyers compete with each other to buy one property, which will lead to higher prices. Since demand is high and supply is low, buyers are forced to comply with the seller’s price and terms if they want to purchase the seller’s asset, product or service.

  • Human resources. 

Restrictions on the movement of workers. Although at present this problem is not so significant, however, with the continuous increase in the number of patients, there may be problems in recruiting both work crews and engineering and management personnel;

  • A sharp decline in the conclusion of consumer transactions. 

In this situation, most potential buyers postponed the issue of buying a home for a while;

  • Logistic. 

Problems in the delivery of building materials and equipment to construction sites;

  • Sustainability and reliability of the financial sector.
  • Lack of forecasting with the development of the situation in the world.

Pandemic influence on the current real estate market

Traditionally home sales in the end of spring and at the beginning of summer tend to net 7% to 10% above market value that is an average of $17,000 to $25,000 more for sellers. However the pandemic situation has drastically changed this statistics. Pandemic has caused economic damage that eventually has increased real estate supply.

Pandemic influence

Real estate experts and economists share their thoughts concerning pandemic changes in the housing market and predictions about attitudes of house owners, buyers and sellers. Economists share a more favorable disposition for sellers. They have pointed to the potential for the seller’s market as today inventory is in lack and housing prices are in strong stability. 

It is said that currently there is a housing shortage that can not be favourable to buyers. Pandemic would not have an impact on the dynamics in real estate. Moreover, right now it is less than a four-month supply when traditionally the real estate market tends to be within five-six months’ supply of homes for sale .

Such a low supply is causing higher prices. Compared with the situation in 2019, homes for sale in March 2020 have risen 8%.

Another fact that needed to be taken into consideration is that now under current laws to protect owners in times of economic uncertainty, there are fewer mortgages in the United States at risk. Therefore more potential buyers and sellers are saying that they might delay the process for a couple of months. Consequently, it is expected that in 2021 prices will rise 3% to 5% because of demand.

On the contrary to comments about the advantages of sellers, real estate attorneys have emphasized that this summer will likely be good for buyers. The fact that more people now are in condition of losing jobs or getting less income gives buyers the advantage as less of them can afford to buy housing property.

Another point that should be taken into the account is lower mortgage rates which also encourages buyers. Senior economist and director of forecasting for the National Association of REALTORS Nadia Evangelou commented that the monthly payment for a typical home drops by nearly $150 and recently rates fall from 4% to 3%. Such a drop has an impact on monthly payments that are reduced by nearly $600.

Conclusion

Buyers’ market is a situation in which supply is higher than demand, which means that apartments or houses for sale are more than demand from buyers. In the seller’s market, demand is higher than supply, which means that the number of buyers is greater than the number of real estate offered for sale.

The situation with the spread of coronavirus and the collapse of the ruble have made changes to the basic forecasts for the development of all segments of real estate dynamics. During self-isolation some buyers were not ready to conduct transactions online. And if the movement in the market of new buildings has remained, meanwhile in the secondary market, transactions almost stopped due to the complexity of the objects with inspection.

Currently, the real estate market is held back by quarantine. After its abolition, a drop in prices is expected and this means new opportunities for real estate investors.

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