Who Benefits From a Buyer's Market?

Posted by Jerad Cox on Saturday, January 16th, 2016 at 9:09am.

Prime Edmonton Real Estate - The Edmonton real estate market is beginning to see a shift from a seller's market to more of a buyer's market. This is a consequence of the downturn in the economy, which has seen thousands of jobs leave Alberta for a variety of local and global reasons. It should be noted that there are different areas of the market that will feel the pinch more than others as the city transitions into this new reality.

What is a seller's market vs. a buyer's market? It is quite simple. Within a demand and supply model, a seller's market takes places when there is a higher demand and lower supply of homes for sale. A buyer's market, on the other hand, takes place when there is a higher supply and a lower demand for purchase.

So who benefits from a buyer's market that we are entering into? Here are 3 that are most obvious:

First Time Home Buyers - The increase in inventory will give a first time home buyer more product to choose from, more time to make a decision, and less pressure to decide - which often contributes to mistakes. And, of course, if done correctly the first time home buyer will save tons of money in both purchase price and bank interest by being able to purchase during

Home Buyers Looking to Upsize Their Home - Many people looking to sell and buy bigger believe that doing so makes more sense in a seller's market. However, the exact opposite is true. Here's a sample scenario: a couple's home now was worth $400 thousand, and they want to upgrade to a home around the $500 thousand mark. If the market drops 5% in price, that means that their home has lost about $20 thousand in value, but it also means that the home they were planning on buying has dropped $25 thousand. That equates to a $5000 cushion to their benefit.

Investors - As inventory increases, people lower prices to keep their property competitive in the marketplace. Investors can capitalize on this making aggressive offers that will save them thousands.  The only issue in the current banking regulatory market is the 20% down for secondary or investment property rule has severely hampered the ability for investors to take advantage of these situations. If you have a solid cash backing, there is an excellent opportunity for picking up holding properties at a good price!

Keep in mind two things that stay true no matter whether it's a buyer's or seller's market. One is that the effects of the type of market has a varying effect on the type, area, and price bracket of the home a buyer is purchasing. Some areas are much more sheltered from downturns because of their specific features or benefits. The other thing is that no matter what the market that there will be those who will be unrealistic with their pricing demands. Know the property, the area, and the market to establish a fair sale price in this buyer's market!

Leave a Comment