What is a seller’s market? Simply put, it’s a market where there are more home buyers than sellers. Based on basic laws of supply and demand, this means sellers have the upper hand: They will likely sell their place quickly, perhaps for over asking price, with a minimum of fuss or pushback from buyers.
Meanwhile, home buyers in seller’s markets face a tough road: Due to increased competition, they’ll have to act fast, bid high, and generally bend over backwards to woo sellers into accepting their offer over the many that may be at their disposal.
So here’s what buyers need to know about seller’s markets—and how to survive them.
What is a seller’s market—and where are they?
Right now, the bulk of the U.S. housing market is a seller’s market. Home prices are rising in the 20 largest U.S. cities, and inventory is tight, meaning that there just aren’t enough homes to go around.
“Even though the number of homes being built has been growing over the past 10 years, it hasn’t kept pace with population growth,” says Daren Blomquist, senior vice president at RealtyTrac.
Another difficulty in meeting this pent-up demand is that construction costs are continuing to skyrocket.
“Lumber prices have increased dramatically, by about 25% over the last 12 months,” says Robert Dietz, chief economist at the National Association of Home Builders. A labor shortage in the residential construction industry is also contributing to the fact that fewer homes are being built, Dietz adds.
Where are the hottest seller’s markets?
The main metric used when evaluating housing markets is home price appreciation.
“The greater imbalance of supply and demand, the faster you’ll see price appreciation,” Blomquist says.
Currently, recent realtor.com® data suggests that cities in or near Silicon Valley—San Francisco, San Jose, Vallejo—claim the title of hottest seller’s markets in the country. But seller’s markets can also crop up in more surprising areas—like Kansas City, KS, Nashville, TN, Orlando, FL, and Jacksonville, FL.
“Those cities all had double-digit home price appreciation in 2017,” says Blomquist. Here are the factors…