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Buyers market or sellers market?

Real Estate Corner


When it comes to buying and selling real estate, we are all subject to the conditions of what most people simply call the "market". It is a simplified way to describe all of the different factors that affect a homes value. These could be things like global, national, and local economic conditions, local demographics and even the desirability of different neighborhoods that all play a part in a property's value. Additionally, the features of a property itself, such as age, size, and deferred maintenance, are market factors. How a property is compared to other properties in the area has a huge affect on its value and how quickly it will sell. All these things work together to make the big picture of the Real Estate Market. It can be very overwhelming, so most Realtors® use terms like "Buyers Market" and "Sellers Market" that help to simplify and easily explain current market conditions.

In a "Sellers Market" there is a large number of people buying houses or fewer people selling, or both. We experience a sellers market from time to time especially when inventory is low or there is suddenly a large influx of new employees to Tehachapi. It can also be fueled by the low mortgage interest rates that make it easier and more affordable for people to buy homes. The ease of buying houses when interest rates are low makes a shortage in housing supply and house prices go up. In this situation buyers have to compete to buy houses. We have all heard of bidding wars on brand new listings or people camping out on new housing tracts to claim their lot.

In a "Normal Market" condition we teeter between the two. When inventory is low/demand high, it causes home values to increase. Eventually prices come up enough to entice more people to put their home on the market, which increases supply. Then the market feels like a buyers market and the situation reverses. This mini market cycle can happen in the course of one to several months and helps to stabilize the market.

A "Buyers Market", on the other hand, is when there are a large number of houses on the market and fewer people that are able to purchase. In local markets it can be because a major employer relocates to a different state. This would cause a job shortage and a shortage of buyers. Also, when interest rates go up fewer people are able to make the higher mortgage payments and fewer people buy houses. This scenario creates a shortage of buyers, and creates competition among home sellers. A Buyers Market in some cases, will cause prices to go down, and sellers should be counseled by their Realtor® to choose a price that is well suited for the type of market that they are selling in. If a house is priced high in a Buyers Market, it may eventually sell for less than if it was priced competitively to begin with. That's why it is important to choose a Realtor® who is familiar with their specific market and market trends.

Josh Riley has been the Managing Broker for Associated Real Estate for 12 years. Josh is a Kern County native and 3rd generation Real Estate Professional. Associated Real Estate specializes in all types of real estate sales and management. We work with buyers and sellers to advise and educate them on current market conditions and guide them through the real estate process. If you have more questions or need more information, call our Tehachapi Blvd. office at (661) 822-3500 to speak with an agent.


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