Real Estate Markets are periodic in nature and change with every season. Each of the seasons define the market in their own characteristics. Every period can vary in terms of how the Real Estate Market reacts and affects its participants including the Buyers and Sellers. Sometimes, it may affect the buyers more than the sellers, and vice-versa. Thus, every season has its own specific characteristics that drive the demand-supply chain of the market in a particular direction. Let’s see what specifications did the the Buyer’s Real Estate Market has to offer.

As Real Estate professionals, we need to be aware of what the current market conditions are so that we can serve our clients with the best possible results.

There are 3 different types of Real Estate Markets

1. Balanced Market
2. Buyers’ Market
3. Sellers’ Market

Buyer’s Real Estate Market

A buyers’ market is when there are more properties that are being listed for sale than the number of potential buyers that are looking for these properties. The number of properties that are listed on the MLS (Multiple Listing Services) are greater than the number of potential buyers.

Characteristics of a Buyers’ Market

1. Economy Conditions: The first one is generally we find the market to be a buyers’ market when there is a contraction in the economy. So, in this case, the economy is not doing so well. We are going through a downturn. Thus, we see that buyers are a little scared because they may not be sure of whether they are going to have a job or if the market conditions in relation to their job are going to change or if they may get laid off. So, there’s a fear in the economy, and as a result of that, the numbers of buyers are less. There is a contraction in the economy.
2. Property Supply: The supply of properties will be greater than the demand for properties. The number of properties that are available for sale will be greater than the number of people who are looking to buy the properties. The demand and supply are not balanced. Supply of properties is greater than the demand for properties in this case.
3. Buyer-Seller Ratio: There number of sellers outnumber the number of buyers in the market. So, a lot of people would have listed their properties, but the number of people who are looking to buy the property is fewer. So, therefore, we have fewer buyers than sellers during a buyers’ market. Thus, as real estate agents, we have an upper hand.
4. Off-Season Selling: As the market tends to move against the buyers, we can say that it is an Off-season market. The sale we make may be considered Off-season. Eventually, buyers will have more time and much better options to look for in case of properties. The properties are not selling as fast. The buyers will tend to shop around and look for more options for an elongated period as the market is not rushing through in speed.
5. Property Prices: In a buyers’ market, we see that property prices will decline. Because there are so many sellers, so many properties that are available for sale, over time people will reduce their prices because the properties are not selling. So, property prices will go down because there is a higher competition, and therefore property prices will decline during this time.
6. Product Phases: During a buyer’s market, properties will take longer to sell. So, the number of days that the property is on the market will be larger. Because the number of buyers is less, it will take the properties a longer time to sell to find that buyer.

SAMPLE QUESTIONS

Now let us look at some of the sample questions that we may see around this topic.

Example 1:

A recent newspaper headline states, local real estate board says it’s now a buyers’ market. What does this mean?

I. Property prices are going up.
II. Property prices are going down.
III. Properties take longer to sell.
IV. Properties sell quickly.

And the options are:

A. statements I and IV are correct
B. statements II and III are correct
C. statements I and III are correct
D. statements II and IV are correct.

The correct answer is B. Statements II and III are correct. So, in this case, property prices are going down and properties will take longer to sell.

Example 2:

What market is characterized by declining property prices, a large inventory of properties and lower demand and higher supply of properties?

And the options are:

A. Buyer’s Market
B. Balanced Market
C. Seller’s Market
D. All of the above

The correct answer is A. All those are characteristics of a buyers’ market because in buyers’ market we’ll see that the property prices are going down, the number of properties that is available for sale is quite high so there’s a large inventory of properties and there will be lower demand and higher supply of properties.

These are some sample questions with solutions and reasoning to get you understand the basic concept of Buyers’ Market.

If you feel this interesting and can think of making a career in the Alberta Real Estate Industry, get in touch with us at 587.936.7779. 

Good luck with your Real Estate Studies!

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