Wednesday, March 10, 2021

The Current Housing Market Revealed In 5 Minutes

At any point, we’re either in a buyer’s, seller’s, or balanced market.

When it comes to real estate, there are three types of markets. The first, which we’re in right now, is a seller’s market (and a hyper-seller’s market to boot). The second is a balanced market, and the third is a buyer’s market. 

Being in a seller’s market means people are willing to pay more money than what a home is worth, and there are several reasons why this is the case right now. Low interest rates and low inventory are a few examples. We recently listed a home in Manassas for $450,000 that ended up selling for $480,000. Oftentimes, people think we go straight from a seller’s market to a buyer’s market, but we actually go to a balanced market first before we can transition to a buyer’s market.


A seller in a buyer’s market will net 

less money, but that doesn’t mean a buyer will pay 

less for their home. 

A balanced market is when people are willing to pay exactly what homes are worth. If a home is worth $475,000, that’s exactly what they’ll pay for it. People tend to think that a buyer’s market means people are willing to pay less for homes, but it’s not so much about what buyers are willing to pay as it is what sellers are going to net. A seller in a buyer’s market will net less money, but that doesn’t mean a buyer will pay less for their home. If a home is listed at $475,000, that doesn’t mean the buyer will get the home for $475,000 or less; it means they have more leverage to get the things they need to buy that house. 

For example, in a balanced market or a seller’s market, a buyer wouldn’t be able to ask for, say, $12,000 in closing costs for that $475,000 home. In a buyer’s market, they would. They might also be able to get home inspection items worth about $5,000. So by selling their $475,000 home in a buyer’s market, that seller is netting $17,000 less. 

So remember: We won’t go directly from a seller’s market to a buyer’s market. We may spend two to three years in a balanced market before transitioning, but if and when we do, it doesn’t automatically mean you’ll pay less for a home. 

As always, if you have questions about our market or are thinking of buying a home, don’t hesitate to reach out to me. I’d love to help you. You have the dream; we have the address.
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