Three types of real estate markets
Is this a good time to buy a home?
There are three main types of real estate markets—a hot market, a normal market, and a cold market—and my experience representing buyers has covered all three.
If you are are considering buying a home, please talk to me to get the current information on the local real estate market. My experience can give you an advantage when it comes time to find your new home and make an offer on it, or list your home so you can sell in a reasonable amount of time.
I follow MLS statistics closely to be able to give my clients knowledgeable advice for buying or selling a home in any real estate market.
What is a cold market?
A cold market is also referred to as a buyer’s market for obvious reasons. The supply of homes on the market in a cold market greatly exceeds the number of buyers looking for real estate. These types of markets are not common, and are usually localized and seasonal.
It’s helpful for buyers with an experienced agent to be able to take advantage of small pockets of weakness to get the perfect deal. I watch the MLS closely to identify opportunities for buyers, whether for a primary residence or investment property.
Houses may be on the market for extended periods of time in a real buyer’s market, and this can present opportunities for buyers to look for bargains from sellers who are tired of waiting for their property to sell at the price and terms they initially thought they could get.
What is a normal market?
The media have a way of distorting the public perception of what a normal real estate market really is, particularly after a hot market has cooled. So it’s important to have an experienced buyer’s representative on your side that can clarify some of the common misconceptions, and help you through negotiations.
In a normal market, there are an average number of homes available (called supply) either from existing homes or new construction. There are also an average number of buyers, although this is tough to define, and is very localized. There is no homogenous “national housing market” because real estate market conditions have always varied greatly from state to state and from one metropolitan area to another.
A normal market does not necessarily favor either the buyer or the seller. Sellers may not have multiple offers on their homes, but they may not be desperate to sell either. Buyers tend to me more cautious and willing to take some time doing their due diligence before making an offer.
The opportunities for negotiation from both sides of the transaction are much higher in a normal market than in a hot market. As always, experience is key in making sure you have an expert negotiator on your side.
What is a hot market, or seller’s market?
Hot markets are characteristically competitive markets for buyers, because there are an above average amount of buyers looking for homes in relation to the number of available homes on the market. A hot market is also referred to as a seller’s market, because it is generally advantageous to sellers on the two major components of a real estate transaction: pricing and terms
It is important during a hot market to have an experienced buyer’s agent on your side to navigate the many pitfalls of a fast moving negotiation for both price and terms.
As a buyer during a hot market, getting the terms you want is a matter of first knowing what to ask for, and then setting up a plan to negotiate your requirements.
What kind of market are we in right now?
The short answer is that the current market has elements of hot, cold, and normal markets, all mixed up into one. Supply, called inventory, is low. There are more buyers than sellers, so that would tend to indicate a seller’s market. However, demand is not so strong to indicate a hot market, either. Buyers are not bidding up new listings with multiple offers on a regular basis.
You can leave the nuances of the market up to me. The bottom line is that if you want to buy, I’ll use my knowledge of the market to get you the best deal. If you want to sell, I’ll use every pricing and marketing strategy I’ve learned in the business to make sure you get a qualified buyer in a reasonable amount of time at a good price.
I would love to update you on current market conditions here in our local real estate market. Please give me a call to get the experienced help you need.