Is It A Buyer's Market Or A Seller's Market?

The question of whether it is a buyer’s market or a seller’s market seems to come up at some point during conversations with buyers and sellers. A lot of folks seem to have established an opinion for themselves about what these terms mean. I’ve heard statements that it is a “buyer’s market” because there are a lot of folks looking to buy a home, or that interest rates are attractive.

However, the way that the real estate industry determines whether it is a buyer’s or seller’s market is simply by our level of inventory. When listing inventory is below 5-6 months, the market is considered a seller’s market. Inventory is determined by how long it will take on average to sell through currently available listings, assuming no new listings are added. If the inventory is determined to be more than 6 months, we start viewing the market as a buyer’s market.

A buyer’s market is one where, due to higher levels of inventory, and thusly more availability of housing options, a buyer has less competition in the market for the same house or properties. This typically gives the buyer more leverage in negotiations. Conversely, when it is a seller’s market, there are typically fewer homes for sale, or more competition for the properties that are available. This is the market in which sellers see multiple offers, bidding wars, and the like.

It should be noted that different market segments like luxury properties don’t necessarily follow the same patterns of buyer/seller markets.

Portland and the PDX Metro Area has been in a seller’s market for the past 6 years, and we have seen year over year property value increases of up to 10% in some areas. While this has certainly pleased some sellers, it has been a bit painful, especially for first-time buyers.

If you are looking to buy or sell in PDX this year, knowing whether it is a buyer’s market or a seller’s market will help determine that expectations that you should have going into the market. It also helps to inform the strategy for marketing a property, or writing offers.

If a purchase or sale is in your 2021 plans, I would love to help you!