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What Is A SELLER'S MARKET In Real Estate?

You might have heard that we have a huge seller’s market right now in real estate. Do you know what that means?What is a seller’s market in real estate?

You might have heard that we have a huge seller’s market right now in real estate. Do you know what that means?

This real estate frequently asked question comes up from time to time when somebody asks “how is the market.” They want to know if its a buyer’s market or a seller’s market. Is now a good time to buy a home?

I have prepared this article, including a short video, to demonstrate the conditions that make this a seller’s market, and then we’ll show you the numbers and how we actually are able to determine the number of buyers and sellers in the housing market.

The definition of a seller’s market in real estate is not complicated. It means there are more buyers than sellers in the market. But how do we measure the number of sellers and buyers in the market?

Seller's Market Explanation Video

Supply And Demand Continuously Change

The real estate market is unique in that there is not a dominant party in the market. By way of comparison, in the automotive industry, there are only a handful of producers so they have more control over the supply-side of the market.

In real estate, there are tens of thousands of new home builders in the US, and this decentralization means that there is far less order and control of the production of new homes. Thus, the market has a tendency to over-correct itself. 

Home Building Cycle

Homebuilders earn a living by building homes, and financial pressures push them to want to continue building. This lag to respond to market changes means that the cycle changes in real estate are extended and therefore fairly predictable. We know that the market will go from an extreme, to equilibrium, and then to the other extreme, before coming back to a balanced market.

When buyers get very active, perhaps because the local population is growing or mortgage interest rates drop, we often see a decline in the number of homes for sale in the market. The increased demand is not immediately acknowledged by new home builders.

If this continues for a good period of time, local builders begin to take notice and they start building homes at a faster rate. The increased demand during this cycle brings more home builders into action.

They build more homes, sell more homes, and then build even more. Typically, this goes on until we see the demand for homes flatten out, and then fall when the stimulus that had excited buyer demand either goes away or diminishes in value to buyers.

The builders who do not adequately monitor the supply and demand for homes continue to build and the market becomes saturated with new homes. This shift where sellers outnumber buyers is called a buyer’s market.

Because there are so many players involved in the housing market, we tend to see cycles where we go from a seller’s market to a balanced market, and then to a buyer’s market. Some home builders go out of business.

The remaining builders slow the production of new homes until the supply of homes for sale is reduced. This reduction typically runs long enough to take the market to equilibrium, and then back to a seller’s market. And then it all happens again. Does that make sense?

The ebb and flow of the market always have us moving back and forth from a buyer’s market to a seller’s market and back again. So what is a seller’s market?

A seller’s market is one where there are more buyers than sellers, and our current market happens to be the strongest seller’s market I’ve seen in my 30-year career selling homes in Tallahassee.

Answers To Your Frequently Asked Questions

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If you are planning to buy a home now, or in the next few months, there are some fees and expenses you’ll need to pay in addition to your down payment that you should know about. Other than your down payment, all money you spend when you buy a home are called “closing costs,” and you should know about them ahead of time. Even experienced buyers can be surprised at all the costs that are associated with buying a home today. This short video will cover what you need to know so that you can (one, be prepared,
What To Offer On A Home In A Sellers Market
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What Is Pre Marketing In Real Estate When Selling A Home?
What is pre-marketing in real estate when selling a home? When your home hits the market and it "goes live," how many buyers will be standing in line to get in? Will it look like an Apple store on the day the new iPhone is released? If not, why not? ... it's all in the video ??????
Ugly Real Estate Listing Pictures | Real Estate Photography Tips
I’ve got some funny, ugly real estate listing pictures to share with you today, along with some simple real estate photography tips. Take a humorous look at some of the WORST pictures I have seen used when marketing a home ... not the way to sell your house!
What Is A Seller's Market In Real Estate?
You might have heard that we have a huge seller’s market right now in real estate. Do you know what that means? This real estate frequently asked question comes up from time to time when somebody is buying a home or selling a home. They want to know if its a buyer’s market or a seller’s market. Is now a good time to buy a home in the Tallahassee real estate market? I have prepared this short video to demonstrate the conditions that make this a seller’s market, and then we’ll show you the numbers and how we
How Much Margin For Negotiation Should I Include In My Asking Price?
I was recently asked "How much margin for negotiation should I include in my asking price?" This is a common question from experienced home sellers. They have sold homes in the past and understand the negotiation process involves a game of give and take, so doesn’t it make good sense to start with a little wiggle room in your price so that you can give it to the buyer to secure a sale? Here's what you should know. I explain EXACTLY how much margin for negotiation you should add to the price of your home t
How Long Does It Take To Sell A Home In 2020?
How long does it take a home to sell in 2020? I've been asked this question a lot recently, and it made me realize a full explanation was in order. Why? Because if you understood how to sell a home for top dollar, you would know that it is a trick question. Trust me on this. Invest the few minutes it takes to watch the video and you'll have a better understanding of selling a home than do most people in the real estate industry (and I'll prove it!).
How Many Times Will A Home Seller Counter Offer?
This real estate frequently asked question is from a recent home buyer. If you are about to buy a home in Tallahassee Florida or beyond and you’re trying to better understand how the real estate negotiation process will work, then understanding how to better control the negotiation is going to keep some of your hard-earned money in your pocket!
5 Ways To Handle The House In A Divorce
If there is one thing that I see divorcing couples doing wrong more often than not, it is the decision on how to handle the house where the couple has lived. While I am not a lawyer and I'm not dispensing legal advice, take it from somebody who has helped hundreds of divorcing couples, there is a right way (and FOUR wrong ways) to handle the house in a divorce. Tell your attorney that you want to do it right!
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Who is responsible for determining the value of the home you want to buy?
If you are planning on buying a home now, or within the next three to six months, you are going to have all sorts of questions pop up for which you’ll want answers. Among the most important of these will have to do with figuring out what a home is worth. As a matter of fact, I was recently asked this question “Who is primarily responsible for determining the market value of the home you want to buy?” Questions about valuation are very common from buyers of all experience levels because nobody wants to overp
Home Selling Tip: Don't Price Your Home On The 9s!
One of the most important steps in your marketing strategy when selling a home is setting the initial asking price for the home. While I have discussed this in previous videos, today I’m going to discuss a technique that I refer to as pricing on the 9s. It works to reduce the buyer pool for the home seller and reduce’s the seller’s chances of getting top dollar for the home. It is a terrible tactic and works against the seller. If you watch this short video, you’ll understand exactly why it hurts home selle

Current Activity Defines Housing Market Conditions

Take a look at this graph of current market conditions.

It shows the supply of homes relative to the current rate of demand so we call it the relative supply of homes. We measure relative supply in “months of supply,” meaning the number of months it would take to consume the current supply of homes for sale.

Relative supply of homes for sale in Tallahassee

Here we see the green line shows the number of homes sold each month (that’s the demand) and the red line shows the number of homes for sale each month (that’s the supply). When we divided the demand into the supply, the result gives us the relative supply of homes shown in blue.

Finally, we take the one-year average of the relative supply to remove seasonality and we can see this plotted in yellow. When the market is balanced, we refer to it as market equilibrium.

Most real estate experts consider equilibrium, or a balanced market, as one with 6.0 months of supply of homes for sale. Look at how glutted the market was from 2006 through 2014, where the relative supply of homes peaked at nearly 14 months of supply. We spent very little time at equilibrium and now for the past 6 years, the overall market has favored home sellers.

As I’ve stated emphatically in recent housing market reports, we need more homes. If you have a home you’d like to sell, the market needs you. If you are a home builder, please get busy bringing more homes.

Market Conditions Impact Buyer Choices And Pace Of Action

Let’s take a look at what it is like being a home buyer under differing market conditions.

This graph measures the percentage of listed homes that sold each month. In a balanced market, we would expect 1/6th of the homes to sell each month. When we apply the seasonal effects to the market, we expect about 4 months per year to have higher sales figures, four at normal levels, and then four months will be below average.

The percentage of listed homes that were sold each month

Instead, the huge buyer’s market that developed in 2006 resulted in a lower percentage of homes selling each month for nearly ten full years.

As a buyer, you could take your time and examine plenty of homes, knowing that there were far more sellers than buyers in the market.

But now that we are in a seller’s market, conditions are completely opposite for buyers. If you don’t jump on a good house right as it hits the market, you’ll lose it to another buyer.

There are far more buyers than sellers in today’s market. Homebuyers need to be prepared to move like lightning when they discover a good listing because it is highly likely other buyers are discovering it too.

The seller’s market conditions make it a difficult time to be a buyer, so make sure you have the best help you can get.

The Local Nature Of The Housing Market

Finally, we’ll take a quick look at the raw numbers for the market.

Remember, a measure of around 6 is a balanced market, while a lower number is a seller’s market and a higher number is a buyer’s market. I’ve identified sellers’ markets in red, balanced market conditions in green, and buyer’s market conditions in orange.

Months of supply of homes for sale in Tallahassee

And that is what so is interesting as we have all three markets happening at once.

Overall, we see a seller’s market in all four quadrants of Leon County. Overall, homes priced under $400K are in a seller’s market, homes priced $400K to $550K are at equilibrium, and homes priced above $550K remain in a buyer’s market.

Seeing the data like this should help you appreciate that the market for your home, or the one that you want to buy, is far more local than merely county level or even quadrant level.

You have to analyze the specific neighborhoods around you to determine the market conditions for your home. A good picture of this can be seen in the $400K to $450K price range.

We see a balanced market overall, yet there is no quadrant where the market is balanced.

Northeast Tallahassee is in a seller’s market, Northwest Tallahassee is in a buyer’s market. Southeast Tallahassee is in a seller’s market, and Southwest Tallahassee has not seen any sales in this price range.

So whether you are buying or selling a home, make sure you get briefed on the current market conditions specific to the home you want to sell or buy. It will make a huge difference in how you should approach the market.

So do you have a good understanding of what makes a seller’s market? I sure hope so. If you can think of something else I should have covered, please address it in the comments section below. If you got good information from this article, please take a moment to hit the Facebook "Like" button at the top of this post.

Video Answers To Your Questions

What are closing costs when buying a home?
What are closing costs when buying a home?
If you are planning to buy a home now, or in the next few months, there are some fees and expenses you’ll need to pay in addition to your down payment that you should know about. Other than your down payment, all money you spend when you buy a home are called “closing costs,” and you should know about them ahead of time. Even experienced buyers can be surprised at all the costs that are associated with buying a home today. This short video will cover what you need to know so that you can (one, be prepared,
What To Offer On A Home In A Sellers Market
What To Offer On A Home In A Sellers Market
We are experiencing the strongest seller's market on record, so you have to be prepared to make the right kind of offer if you want to buy a home today. And it's not all just about how much to offer, there is so much involved when making the "RIGHT" offer in a seller's market. I have shared my experience of selling thousands of homes in a seller's market, both with working for buyers and with working for sellers. I have shared 3 important home buying tips to enlighten you on what matters most to sellers so
What Is A Seller's Market In Real Estate?
What Is A Seller's Market In Real Estate?
You might have heard that we have a huge seller’s market right now in real estate. Do you know what that means? This real estate frequently asked question comes up from time to time when somebody is buying a home or selling a home. They want to know if its a buyer’s market or a seller’s market. Is now a good time to buy a home in the Tallahassee real estate market? I have prepared this short video to demonstrate the conditions that make this a seller’s market, and then we’ll show you the numbers and how we
How Much Margin For Negotiation Should I Include In My Asking Price?
How Much Margin For Negotiation Should I Include In My Asking Price?
I was recently asked "How much margin for negotiation should I include in my asking price?" This is a common question from experienced home sellers. They have sold homes in the past and understand the negotiation process involves a game of give and take, so doesn’t it make good sense to start with a little wiggle room in your price so that you can give it to the buyer to secure a sale? Here's what you should know. I explain EXACTLY how much margin for negotiation you should add to the price of your home t
How Long Does It Take To Sell A Home In 2020?
How Long Does It Take To Sell A Home In 2020?
How long does it take a home to sell in 2020? I've been asked this question a lot recently, and it made me realize a full explanation was in order. Why? Because if you understood how to sell a home for top dollar, you would know that it is a trick question. Trust me on this. Invest the few minutes it takes to watch the video and you'll have a better understanding of selling a home than do most people in the real estate industry (and I'll prove it!).
How Many Times Will A Home Seller Counter Offer?
How Many Times Will A Home Seller Counter Offer?
This real estate frequently asked question is from a recent home buyer. If you are about to buy a home in Tallahassee Florida or beyond and you’re trying to better understand how the real estate negotiation process will work, then understanding how to better control the negotiation is going to keep some of your hard-earned money in your pocket!
What Is A Swimming Pool Worth?
What Is A Swimming Pool Worth?
What Is A Swimming Pool Worth? Recently, a customer buying a home asked me a simple question. She inquired “how much does a pool add to the value of a home?” Pretty simple question, right? Well, by the end of this short video, you’ll know the not-so-simple answer (and why this is so important).
How Digital Has Changed How We Sell A Home Today
How Digital Has Changed How We Sell A Home Today
Time to sell a home? The digital age has had a huge impact on what homeowners must do to get top dollar when selling their home. In this video, Joe Manausa explains why and how things have changed, and then lays out the plan for what home sellers must do.
What Is Pre Marketing In Real Estate When Selling A Home?
What Is Pre Marketing In Real Estate When Selling A Home?
What is pre-marketing in real estate when selling a home? When your home hits the market and it "goes live," how many buyers will be standing in line to get in? Will it look like an Apple store on the day the new iPhone is released? If not, why not? ... it's all in the video ??????
How To Subscribe To The Joe Manausa Real Estate Channel On YouTube
How To Subscribe To The Joe Manausa Real Estate Channel On YouTube
Have you subscribed to the Joe Manausa Real Estate Channel on YouTube? It's a "must" for people who are planning to sell or buy a home in the near future. Just click subscribe to get started, and the bell icon, so that you never miss anything!
Who is responsible for determining the value of the home you want to buy?
Who is responsible for determining the value of the home you want to buy?
If you are planning on buying a home now, or within the next three to six months, you are going to have all sorts of questions pop up for which you’ll want answers. Among the most important of these will have to do with figuring out what a home is worth. As a matter of fact, I was recently asked this question “Who is primarily responsible for determining the market value of the home you want to buy?” Questions about valuation are very common from buyers of all experience levels because nobody wants to overp
Home Selling Tip: Don't Price Your Home On The 9s!
Home Selling Tip: Don't Price Your Home On The 9s!
One of the most important steps in your marketing strategy when selling a home is setting the initial asking price for the home. While I have discussed this in previous videos, today I’m going to discuss a technique that I refer to as pricing on the 9s. It works to reduce the buyer pool for the home seller and reduce’s the seller’s chances of getting top dollar for the home. It is a terrible tactic and works against the seller. If you watch this short video, you’ll understand exactly why it hurts home selle

Video Housing Market Reports

Housing Market September 2020 | Ginormous Real Estate Report
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Foreclosures 2020: The Coming Coronavirus Foreclosure Crisis
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The Tallahassee real estate market continues to suffer from a decimated inventory that forces multiple buyers into bidding wars over each new listing that hits the market. Hands down, bar none, this is the best time to sell a home that I’ve ever seen in my near 30 years experience selling homes in Tallahassee. There simply are not enough homes for sale for our normal market demand. That’s right. Demand is not the highest I’ve ever seen, but supply is the lowest on record. The reduced supply of homes is due
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Your Local Expert In Tallahassee

When moving to, in, or from Tallahassee, you will fare better if you work with a local expert. We are here to help. If you have further questions on the Tallahassee real estate market, you can leave a comment below, give us a call at (850) 366-8917, or drop us a note and we'll give you the local information needed to ensure a successful, smooth transaction.

As a local born and raised in Tallahassee with a focus on customer service, I promise you'll find great success when working with Joe Manausa Real Estate, just as have our past customers. You can read thousands of their reviews reported on Google, Facebook and Zillow right here: Real Estate Agent Reviews Tallahassee.

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