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How To Tell The Real Estate Market Is Shifting And What It Means

Tom Sprich • Mar 16, 2022
Grand Rapids Real Estate Agent

If you are trying to buy a home, you are probably keeping tabs on the real estate market trend. The real estate market is constantly shifting, impacting buyers' purchasing decisions. Thus, buyers are always on the lookout for the perfect time when the prices are low to make a purchase. This guide will help you understand the two markets under real estate and how to tell when the market is shifting.



What Does a Buyers' Market and Sellers' Market Mean?


When the supply of listed property is more than the demand, the buyers have the upper hand. Hence, it's referred to as a buyer's market. So, when the real estate listing is high, and the interested buyers are few, the conditions give buyers more leverage over sellers. A buyer's market pushes real estate prices low as the homes remain on the market longer. So, sellers have to compete amongst themselves to attract buyers, including reducing their asking prices.


On the other hand, a sellers' market is when there is a higher demand for property than the listed property. When the real estate inventory is low, and there are many interested homebuyers, the buyers compete to buy property. They engage in bidding wars that could be above the seller's asking price.



Signs of a Shifting Market


Here are four signs that indicate a shift in the real estate market.


1. A lot of Expiring Listings


A major indicator of a real estate market shift is an increase in the number of the expired property listing. Expiring listings show the market is shifting to a buyers' market. An expired listing refers to homes that have been listed in the Multiple Listing Service but didn't sell within the specified period.


Despite the high demand for housing, sometimes, some properties are listed but never bought. In some cases, the expired listing is due to a seller who couldn't decrease the price of their property to match the market price.


2. Change in the Number of Offers


The most noticeable characteristic of a market shift is a change in the number of offers. There are usually multiple offers from buyers on the same property during the high season. However, as the market shifts, the multiple offers reduce before dropping altogether.


The number of offers on a property isn't public knowledge. Therefore, it's up to the property owner to contact a buyer with the best offer to make a deal.


3. Absorption Rate


It refers to the number of months buyers take to absorb the current inventory. The absorption rate refers to the number of months it takes all the listed homes to sell. When the absorption rate is higher than before, it indicates a shift in the real estate market.


Usually, the average absorption rate is between 4 and 6 months. So, when the absorption rate is more than six months, it's a buyers' market, and when the rate is less than six months, it's a sellers' market.


4. Days on Market


Another great indicator of a shifting real estate market is a change in the days on the market. In a sellers' market, it takes fewer days to sell a home than a buyers' market. When the market is buyer-friendly, it takes more days to sell a home.


A longer selling timeline shows a less heated market and presents a unique opportunity for potential home buyers. When the "for sale" signs put on homes take longer to switch to "sold," it shows the sellers' market has begun slowing down.



Don't Always Wait for a Buyers' Market


Now that you can tell whether the real market is shifting to a buyer's or sellers' market, you might be tempted to wait for the perfect conditions to buy your home. However, given the unpredicted real estate market, the right time to buy is now, before the market shifts further. Go through our Grand Rapids home listing today to identify your dream home!

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