Real Estate Market Basics

The real estate market is the arena in which the buying and selling of homes occur.

This arena is sometimes “hot”,“cold”, or “lukewarm” depending on a variety of factors. The following post will break down the basics of the market as well as give you some pro-tips to understanding it’s nuances.

Basic Economics: To understand the way the real estate market works we first need to understand Supply & Demand.

Supply & Demand refers to how much of something is demanded by buyers and how much is actually available. (or for a wordier definition read more here)

In real estate, we have three primary “temperatures” to describe the state of supply & demand.

  • Seller’s “Hot” Market : A seller’s market occurs when there are fewer homes than there are buyers. This causes prices to escalate create fierce competition. Imagine if there were only two slices of pizza and 20 pizza lovers. That would be some valuable pizza.

  • Buyer’s “Cool” Market: A buyer’s market occurs when there are MORE homes than buyers. Prices decline and homes stay on the market for longer. Following the pizza analogy, it’d be 2 people and 20 slices of pizza. Plenty of supply for a low demand. (Unless you’re super hungry I guess).

  • Balanced Market: As you may have guessed, a balanced market is the happy medium between the two. The amount of real estate available is equal or close to the amount of buyers. (Everyone gets pizza!)  

And Here’s How They All Work Together

It’s important to understand the state of the market because it will influence the strategy you use to reach your goals. Also, make sure you work with an area expert, your broker should intimately understand the markets of the area you want to live or are selling in.

Want info on Tacoma’s current market? Shoot me an email and I’m happy to share!

Till next time!


By | 2018-05-02T17:52:39+00:00 May 2nd, 2018|Real Estate|0 Comments

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