When should I sell my house? When should I buy a house? Should I wait for prices to go down? Do we wait for a seller’s market or buyer’s market? We’ve heard a lot of these questions in the past few years, so we decided to put our answers here, but readers beware: the best time to buy or sell is when you’re ready.
What is the difference between a buyer’s and seller’s market?
To make it simple: a seller’s market happens when there are more buyers than there are houses for sale. On the other hand, a buyer’s market occurs when there’s an excess of homes for sale and fewer buyers looking to scoop one up. Let’s do a slightly deeper dive:
In a buyer’s market, potential buyers will most likely spend a lot more time shopping around for home and weighing their options, as there is no need to be in a rush. There is plenty of inventory on the market and more options to consider. Home prices are usually stable, or even dropping as buyers have more leverage.
In a seller’s market, the prices of homes will likely increase, as sellers can expect multiple offers or even bidding wars on their homes. The seller holds more negotiating power and the lack of inventory on the market can help them leverage the price.
Is a seller’s market a good thing?
A seller’s market is a great thing for sellers, but buyers…not so much. It isn’t a bad idea to buy a home during a seller’s market, as sometimes influencing factors can favor the buyers. However, since sellers can raise their prices due to the lack of inventory, buyers may not be able to afford the high prices. Buyers must also compete with each other for bidding on a home, and some may outbid others by a large margin to make sure they secure the home.
For sellers, a seller’s market is great! It is very likely that their home will sell very quickly, as there are more buyers than sellers. Sellers are also very likely to get top dollar for the sale of their home, and may receive multiple offers.
Is it better to wait for a buyer’s market?
Waiting out a seller’s market is a risky game to play. While it is true that inventory will rise and builders catch up with demand, it isn’t likely that home prices will fall significantly. If you’re truly eager to buy a home as soon as possible, don’t hold out hope that prices will drop as interest rates continue to increase. However, don’t let FOMO (fear of missing out) drive your desire to buy quickly if you’re truly not ready to buy a home. Just because the market is hot, doesn’t mean you need to play a role in it.
When it comes to the timing of buying a home, don’t follow the market. Follow your finances. If you’re credit score is lower than you’d like, or you don’t have a down payment saved, or if your debt-to-income ration is high? Wait it out. Your positioning is far more important to your homebuying experience than what the market is doing.
Read one of our recent posts: Is competition slowing?