Understanding the Housing Market: A Tale of Two Markets
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For a long time, the housing market was all sunshine for sellers. Homes flew off the shelves, and buyers had to compete fiercely. However, things are starting to shift.
Some areas remain competitive for buyers, while others are seeing homes sit on the market longer. This shift gives buyers more breathing room.
In other words, it’s a tale of two markets. Knowing which one you’re in is crucial for making a move.
Buyer’s Market vs. Seller’s Market
What Is a Buyer’s Market?
A buyer's market happens when there are many homes for sale but not enough buyers. In this situation, homes tend to stay on the market longer. They usually sell for less than they might in a seller's market. Buyers can negotiate better deals, as they have more options and less competition.
What Is a Seller’s Market?
Conversely, a seller’s market occurs when there are not enough homes available for the number of buyers wanting to purchase them. In this scenario, homes sell quickly, often with multiple offers. Prices often rise because buyers are willing to pay more to secure a home.
The Market Is Starting to Balance Out
For years, nearly every market in the country favored sellers. This created challenges for buyers, especially first-timers. Now, according to Zillow, the national housing market is balancing out.
The index in this graph measures whether the national housing market is leaning toward being a seller's, buyer's, or neutral market. Each month, this market is gauged on a scale from 0 to 100. The closer the number is to 100, the more sellers have the advantage.
The orange bars in the graph illustrate the years where sellers held the strongest advantage, from 2020 to early 2022. Over time, the market has become more balanced. It went from a strong seller's market to a less intense one. Recently, it has appeared to be predominantly neutral (indicated by the gray bars on the right side). This shift allows buyers to gain some negotiating power again.
In a neutral market, homes generally stay on the market longer. Bidding wars are less frequent, and sellers often need to make concessions like price reductions or assistance with closing costs. This change presents buyers with more opportunities and less competition than in previous years.
Why Are Things Changing?
Inventory plays a significant role in this shift. When plenty of homes are available for sale, buyers have more options. This affects home price growth negatively. According to data from Realtor.com, the supply of available homes is not increasing uniformly across the nation.
This graph compares inventory changes to figures from last year (blue bars) and data from 2017–2019 (red bars) across different regions of the country.
The South and West regions of the U.S. have experienced substantial increases in housing inventory over the past year (noted by the blue on the right). Both regions are approaching pre-pandemic levels. This is why more buyer's markets are emerging there.
Yet, in the Northeast and Midwest, inventory remains low compared to what it was before the pandemic (this is indicated by the larger red bars). As a result, those areas are likely to stay in a seller's market for the foreseeable future.
Understanding Your Local Market
Every local market is unique. Even if national reports provide an overview, your town—or even your neighborhood—could reveal an entirely different story.
Understanding which type of market you’re in helps you make informed decisions about your move. This is why collaborating with a local real estate agent is vital right now.
As Zillow points out:
“Agents are experts on their local markets and can craft buying or selling strategies tailored to local market conditions.”
Local agents comprehend the unique trends in your community. They can assist you in making the best choices, whether you're buying or selling. With their strategies, you can navigate the market successfully, regardless of its orientation. They can identify hidden gems, price homes appropriately, negotiate effectively based on market dynamics, and more.
The Importance of Professional Guidance
Working with a local real estate agent not only gives you peace of mind but also adds a layer of expertise to your home-buying journey. They know the ins and outs of the market, so you won't have to guess what offers to make or how to respond to competing bids. Their insights can help you view prospective homes through an informed lens.
Final Thoughts
If you are contemplating making a move, connect with a local real estate agent. They will gladly help you understand your local market and develop a game plan that works for you.
What’s one thing you’re curious about concerning the market in your area?
April 30, 2025