When you start talking real estate, you’ll hear jargon terms such as Buyers’ Market, Sellers’ Market and Absorption Rate. Everyone will have an opinion on whether now is a good time to sell your home, buy, move up or down in the market or even panic about your current real estate investment(s).
What does this all mean? And how does the market affect you? Before you panic, or get swept up in media reports, you can learn a lot about the market and how it affects your real estate goals by talking with an experienced REALTOR®. (Sound good? Get In Touch Now)
An experienced REALTOR® will have a deep understanding of market trends, micro markets and current market conditions.
In the meantime, let’s look at what these terms mean. Basically, it boils down to economics and the law of supply and demand.
When supply exceeds demand, we’re in a buyers’ market. In other words, a buyers’ market is when the number of homes for sale is greater than the number of buyers actively seeking to purchase a home.
Generally, in a buyers’ market, buyers have more choice and may have more of an advantage when it comes to negotiating price and subject to sale conditions.
When demand exceeds supply, we’re in a sellers’ market. In terms of real estate markets, this occurs when there are more buyers than available homes on the market.
In a sellers’ market, generally buyers have decreased choice and can find themselves having to make decisions very quickly. In addition, sellers may have an advantage when it comes to negotiating price and subject to sale conditions.
In real estate, absorption rate is a key indicator to determining marketing conditions. Absorption rate is calculated by dividing the average number of sales per month by the total number of available homes.
Traditionally, an absorption rate above 20% indicates a sellers’ market. An absorption rate below 15% indicates a buyers’ market.
So, What Kind of Market Are We In And Does It Actually Matter?
Based on absorption rate (12% absorption rate, September 2019, Central Okanagan), the numbers indicate that the Central Okanagan is currently in a Buyers’ Market.
The reality is that our market is comprised of micro markets (popular streets, sought after neighbourhoods, property types etc.) that can see unique activity regardless of what the overall regional trend might be.
We’re also seeing a lot of activity from buyers who are moving up within the market. This means, they’re selling their current home and moving into something more expensive. Overall, the market is ideal for people moving up or down. After all, there’s that all-too-common saying: “you buy and sell in the same market”.
So, whether you’re looking to sell your home, purchase a home, or move up or down within the market, rather than trying to determine the current market conditions for yourself, get in touch. We’d be happy to review what’s happening in the market where you live or where you want to live. Then, we can move forward with a real estate plan that is right for you and your real estate goals.
Our experience and knowledge can be put to work for you! We will help you take advantage of the current market conditions.