The difference between a seller’s and a buyer’s market
Published on February 21, 2020
When it comes time to buy or sell a property, buyers and sellers wonder if they’re in a seller’s market or a buyer’s market. The answer provides a good indication of how to proceed with their real estate project.
The trend in a given market segment or geographical area is based on supply and demand.
A buyer’s market
Generally speaking, a buyer’s market is favourable to people looking to buy a home. The number of properties for sale (supply) is high compared to the number of potential buyers (demand). This gives buyers a larger inventory to choose from.
The fewer potential buyers there are, the longer it tends to take to sell a property. Prices are also driven down because of the higher competition between sellers.
To increase their chances of selling quickly, sellers must offer a product that rivals others on the market, at a price that is attractive to potential buyers.
A seller’s market
The opposite is true in a seller’s market. The number of properties for sale (supply) is low compared to the number of potential buyers (demand). For this reason, it is likely that several buyers will be interested in the same properties. This phenomenon can create a real estate bubble, causing prices to shoot up.
The Montréal area is the perfect example of a market that has been very lively since 2018. Are you aware of the significant advantages of selling commission-free in a fast-moving market? The amount sellers save on the commission can be put toward a larger down payment on their next home.
A balanced market
In Quebec, the real estate market tends to be balanced in most areas. This means that there are 8 to 10 sellers for every buyer, as per the Canadian Mortgage and Housing Corporation (CMHC).
According to Joanie Fontaine, an economist at JLR Land Title Solutions, the robust economy and population growth in 2018 has led the real estate market to grow in most Quebec regions (article available in French only).