The Real Estate Market Cycle


No matter what the station of the real estate market cycle, there are positive and negative components associated with each position of the cycle which affect buyers and sellers of real estate. 


A real estate market that is termed a "seller's market" is often cited as a "good market", perhaps even a "great market" or a “red hot” or “white hot” market.  Likely, you will inevitably hear the media ask the dramatized question over and again "When will the bubble burst?".  Yet, whether a certain real estate market is "good", "bad", “red hot”, “white hot” or simply "great", is a matter of one’s viewpoint within a real estate transaction.  


 A "seller's market" brings together a real estate ingredient combination which can command a high price for property and an attractive amount of net proceeds for sellers.  However, sellers become purchasers who will pay a premium for their new home when it comes time for them to buy a home.  There may be a limited supply of houses for sale, which, in part, fuels the high market premiums paid by buyers of real estate during a "seller's market".  The benefit to buyers of real estate during a "seller's market” is, usually - not always, there are relatively attractive mortgage interest rates available during this period of the economic real estate cycle.


A "buyer's market" may mean a seller's house will be on the market for a longer period.  The length of time a seller’s home remains on the market is dependent upon how many houses are for sale at a certain point in time in a geographic area in a certain price range and, at what price the home is offered.  Typically, the number of homes that are for sale during a “buyer’s market” tends to be sufficient to provide purchasers with an assortment of homes from which to choose and the prudent benefit of time to make a purchase decision.


As the term implies, a "balanced market" might be considered fair for both sellers and buyers.  You may have noticed from the graphic that a “balanced market” appears twice in the real estate market cycle.  A "balanced market" means there is an ample supply of homes for sale for buyers to choose from, sellers are receiving an amount offered for their homes relatively near to their list price.

As you begin to realize, whether a particular real estate market is considered “positive” or “negative”, “good” or “bad”, depends upon who is describing the market conditions.  

In truth, each station of the real estate market cycle can possess diametrically opposed elements depending upon one’s point of view.  The optimist would say correctly, there is something good found in every circumstance, no matter how “bad” it may seem from their vantage point. 

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