Ask the REALTOR: How can I tell whether I’m in a buyers’ market or a sellers’ market?

Ask the REALTOR® is a regular video series in which I answer your most commonly-asked real estate questions, with a new Q&A posting every week. If YOU have a real estate question for me, drop me a note here.

This week’s question: What are the pros and cons of using a local lender vs. a national mortgage service? Here’s the answer in this brief video, and don’t miss the transcript below.

Transcript:

Hi, this is Cari McGee with Keller Williams Real Estate. Welcome to this week’s episode of “Ask the Realtor.” Every week, I answer questions from buyers and sellers and pretty much everyone in between regarding real estate. So, this week’s question is…

How can I tell whether I’m in a buyers’ or a sellers’ market?

Well, one good way to figure that out is to ask your agent for the “absorption rate” for your market. Now, the absorption rate is defined as the amount of time it would take for all the homes in an area to sell out completely without any new homes entering the market. For example, if there are 100 homes on the market and 50 sold in one month, you would have a two-month supply. So you would have a two-month absorption rate, and that’s because 100 divided by 50 is 2.

A two-month absorption rate indicates that you are in a sellers’ market. Anywhere from about one to two-and-a-half months is a sellers’ market. Three to four is kind of a balanced market…neither sellers nor buyers have the upper hand. And then anything over five months means that you’re in a buyers’ market. So, take that into consideration when you’re making your offer.

And I hope that that has helped. By all means, go ahead and give me a shout if you have any real estate questions via any one of the methods that are to follow on the screen. Thanks so much, have a good one. Bye!