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What Does a
“Seller’s Market” Mean?

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There are already so many things that you’ll need to think about when buying or selling a home but one of the most important variables people tend to overlook is timing. In order to make sure you are getting a great deal while selling your home (or finding a steal while buying one), you’ll need to be able to effectively read the market.

Is Now the Right
Time to Buy?

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Is now the right time to buy? Is now the right time to sell? These are questions that people ask themselves every day. Of course, whether you are able to actually wait for the right market conditions will depend on your personal financial and living situation (in some cases, you might have to move, for example) but, nevertheless, it will always be beneficial to understand the state of the market you are buying or selling in.

What's in the phrase?

 You’ve probably heard the term “seller’s market” in the past, but you might be wondering what, exactly, that phrase really means. Below, we will discuss the most important things for you to know about a seller’s market, including how you might need to adjust your real estate selling or buying strategies during certain market conditions.

What is a Seller's Market?

Generally speaking, the term “seller’s market” is used to describe any situation in which the housing market, as a whole, is favorable towards people who are looking to sell their homes. Usually, this means that housing inventory is relatively low and there are a lot more people looking to buy a home than there are homes available.


Since the beginning of the COVID-19 pandemic, there has been a fairly consistent seller’s market in the United States, along with many other countries. During an extended seller’s market, housing values can be expected to rise.


Signs of a Seller’s Market

When a seller’s market “officially” begins—and ends—is not always easy to tell. The housing market can sometimes be volatile and transitions between a buyer’s and seller’s market will often be somewhat gradual. Additionally, whether it is a seller’s market or not can vary by location, as well as housing type.




Nevertheless, there are often a few telltale signs

that a seller's market is emerging.

  

Homes do not stay on the market for very long

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In a seller’s market, homes will typically sell very fast and in extremely competitive markets, some people might even purchase a home without ever even seeing it.

Housing prices are consistently increasing

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If housing prices, when adjusted for inflation, increase for more than four months straight, this is a clear sign that a seller’s market has emerged.

Bidding wars ensue


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When a housing market is competitive, it is not uncommon for several people to bid on the same property—some people might even receive multiple bids on the first day they list their house. With several potential buyers available, the process of selling a home becomes considerably easier.

Buyers are requesting fewer repairs

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It’s normal for people to request a few repairs when purchasing a home but during a seller’s market, buyers cannot afford to be quite as picky.

There is a shortage of housing stock

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If there is a shortage of labor or materials, building new homes becomes much harder. This creates a strain on the overall housing stock which, in turn, favors buyers.


How Often Does a Seller’s Market Occur?

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 According to economists Henry George and Homer Hoyt, the US has consistently—albeit only loosely—exhibited 18-year property value cycles over the course of the past 200 years. However, this is more of an observation of a clear trend, rather than an exact science. If an extreme event occurs, such as the Housing Crisis in 2008 or the COVID-19 outbreak in 2020, the housing market might move in unexpected directions.

Should I Sell My House During a Seller’s Market?

When all else is equal, selling your home during a seller’s market will undoubtedly get the most value for your property. However, that doesn’t mean that every time a seller’s market begins to formulate it will make sense for you to sell. You will after all, still need a place to live—even though you will get more money for your home, you will also likely end up paying more for wherever you end up living next.


Selling during a peak seller’s market makes sense if you are looking to downgrade your home (both in size and price) or move to a cheaper location. On the other hand, if you are hoping to upgrade your home or transition to a more expensive market, it might actually make sense until the market begins to favor buyers. Of course, other factors, such as stages of life and personal financial goals, will also need to be accounted for.


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Conclusion

During a seller’s market, you may be able to make quite a bit of money while selling your home. However, before making any major financial decision, be sure to do a comprehensive overview and account for all personal variables—whatever they might be.

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