If you ask your real estate agent if it’s “a good time to buy, or sell” and they simply say “yes,” you may be getting bad advice.
It’s interesting how markets that highly favour sellers are almost always characterized as “a good real estate market” while those that favour buyers are commonly referred to as a “bad market”. In fact, there are three kinds of real estate markets; those that favour sellers, those that favour buyers and those that are more balanced with neither the buyer or the seller having a distinct advantage, one over the other. Given that buyers and sellers have divergent interests, a good market for sellers is a bad market for buyers. The reverse is true when market conditions favour buyers. Crocodile tears for sellers (I wanted to use ‘dog lips’ here, but a quick look at Urban Dictionary said, “no!” Yikes! I am getting old and the meaning of things keep changing).
Often you can find more than one of these markets at play in a specific geographic region. For instance, through much of last year, small condos were in abundant supply, and as demand softened this created a buyer’s market for small condos. Buyers found a greater selection of properties to choose from and seller’s became more flexible in negotiations. Upper end condos (larger, finer finishes, underground parking, etc.) saw a better balance between supply and demand leading to more balanced conditions. A seller asking a fair price could expect reasonable offers. Finally, single-family homes valued at $350,000 to $400,000 (a bit on either side of the average for this area) were still in short supply and seller’s had more clout at the bargaining table, at some points, still experiencing a seller’s market. Let’s call these different markets, micro-markets.
For those of you inclined to buy or sell it’s imperative that you understand what kind of micro-market you’re operating in and how you can best leverage that knowledge. More importantly, you should understand that perceptions of a micro-market are often completely false, and you can use those false impressions to your advantage as well. For instance, a seller who owns a home that would still fit the “balanced market” supply/demand test might assume it’s a bad market for all sellers and agree to sell to you for less than he/she should (His or her agent may fall under the same false impressions due to a sudden reduction of caloric intake due to falling sales). Conversely, a seller who does an amazing job of preparing their home for sale can sometimes create a feeling of scarcity around their property by presenting it in a manner that makes it look better than all of the others for sale. You don’t need to have the only house for sale if you have what’s perceived to be the nicest, or the best one for sale.
Understand the micro-market that you’re operating in by learning exactly how much supply exists, relative to demand. Total available inventory, divided by sales in the most recent 30 days will produce a number known in the business as “months of supply”. If the months of supply are fewer than four, this is generally considered a seller’s market. You won’t find many seller’s markets in Saskatoon right now, though that could change as we move towards spring. If months of supply are between four and six, you have balanced market conditions. Finally, if months of supply is greater than six months, buyers are in the driver’s seat.
I’m always happy to answer your Saskatoon real estate questions. All of my contact info is here. Please feel free to call or email.
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