Important Facts, Terms, and Trends You Must Understand to Interpret the Market

Dave Nimick Chicago Real Estate Podcast

Do you know how to interpret market conditions? Today, we will teach you how to do so by illuminating some basic, yet important, facts and terms.

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The most common question people ask Realtors is, “How’s the market?” The answer to this question, however, is more complex than many might think.

There are a few basic facts buyers, sellers, homeowners, and investors must understand in order to properly interpret the market. Here are six of the most significant:

1. The market is dependent on supply and demand.
2. The speed of the market impacts (and is impacted by) other real estate conditions.
3. The market relies on the cost of borrowing money (i.e. interest rates).
4. The market relies on the ease with which lenders are willing to loan out money.
5. The market is influenced by a number of specific positive and negative forces.
6. The market relies on location, location, location.

With these points in mind, those seeking to interpret the market will also need to grasp certain industry-specific terms and phrases. Allow us to define a few of the most critical:

Seller’s market: A market in which demand is greater than supply, giving sellers the advantage.

Buyer’s market: A market in which supply is greater than demand, giving buyers the advantage.

Balanced market: A market in which supply and demand are relatively equal, meaning neither buyers nor sellers have a distinct advantage.

While each of these terms gives us a general idea of who might benefit from a given type of market, there are also specific scenarios which give buyers and sellers even greater power.

A seller who is downsizing while in a seller’s market, for example, will enjoy great gains from listing their more expensive property before going on to purchase a more modest one.

Sellers who wish to move up, on the other hand, will be better off doing so during a buyer’s market. First-time buyers, as well as investors, will also be at a strong advantage during a buyer’s market.

Each market is named according to which group of people will most benefit from it’s conditions. Ironically, buyers’ motivations tend to run conversely to market trends. This happens because it is during seller’s markets, not buyer’s markets, when the media begins to up-play the appeal of making a home purchase.

Real estate conditions are perpetually shifting, so knowing how to interpret the market will be essential to your success whatever your goals may be.

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Ultimately, buyers define the market regardless of whether they currently are in an advantageous position.

The real estate market changes often. Sometimes these changes are dramatic, and sometimes they are subtle. In either case, real estate conditions are perpetually shifting, so knowing how to interpret the market will be essential to your success whatever your goals may be.

If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from us soon.