What is a seller's market and how does it affect you?
In a seller’s market, the sales price of homes may be higher because there are more buyers than homes on the market. In other words, the demand is greater than the supply. With home sales hitting their highest level since April of 2008, you will find yourself in the middle of a hot housing market [1]. What does this mean for you?
For sellers
As a seller, you should have a plan for dealing with offers. Are you going to accept the first offer someone puts on your home, or are you going to wait? Knowing the state of the market in your neighborhood can help you better analyze when you should accept an offer and when you should hold off. Consider talking to an agent to figure out what is best for you [2].
For buyers
As a buyer, don't assume that a house on the market now will still be on the market over the weekend. Make a point to look at houses you're interested in as soon as you can. And since buyers are more aggressive in a competitive market, you will need to be prepared to buy when you find the right house. Keep in mind there are going to be times that you miss out on a great house, so learn from the experience and keep moving forward [2].
What to watch for
One of the fears associated with soaring homes sales is a housing market crash. When there are many buyers, programs begin to arise allowing them to buy homes using an alternate credit score or low down payments with little documentation of their financial situation. While this allows buyers to buy quickly, it also allows buyers to buy homes that they might not be able to afford. However, there has been legislation passed to eliminate risky behavior like this from lenders. And since the previous housing crash was only about 10 years ago, lenders and borrowers remember their mistakes and have learned from them. While it's alright to remain cautious, the job market looks quite good and there isn't a lot of data indicating another crisis [3].
[1] The housing market is suddenly hot again, CNN
[2] It's a Sellers' Market: What That Means for You, Zillow
[3] Are We Heading for Another Housing Crisis? U.S. News
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