What is the difference between a Buyer's Market and a Seller's Market in Real Estate?
Here in Wichita, Kansas the Real Estate market has consistently been a strong Seller’s market for the last few years. What does it mean to be a Seller’s Market? How does a homeowner or home buyer know if they are in a Seller’s or Buyer’s Market?
In Real Estate, the short answer is this (for all you military types the bottom line up front – BLUF):
Seller’s Market – There are more people looking to buy than there are homes on the market.
Buyer’s Market – There are more homes on the market than there are people looking to buy.
As Real Estate Professionals, we normally calculate the market capacity by doing a little simple math. First, we find the number of homes sold in the past 12 months. Then find we find the number of houses actively available on the market.
(# of homes available) / (# of homes sold in the past 12 months) x 12 months =
# of months’ worth of inventory
If the inventory available is less than 6 months, then we are in a Seller’s market. If it is greater than six months then we are in a buyer’s market. Around 6 months of inventory and we are in a balanced market. In Sedgwick County as of today, there are 1,380 homes currently on the market, in the past 12 months, 8,121 homes were sold.
(1,380) / (8,121) x 12 = 2.04 months’ worth of inventory
As you can see, we are well over the line into Seller's Market. Home Buyer’s and their Realtors are consistently battling to get their offers in as fast as possible to get the highest chance of getting their offer accepted. In fact, in the past 12 months, the median days on market for a home was 19 days. That mean’s the MAJORITY of homes are sold in less than three weeks! If you are thinking about buying a home this coming moving season make sure you are well informed about the current market and are prepared to move quickly in this fast-moving Real Estate Market.
Want to Sell? Get a free estimate of the value of your home here.