The law of supply and demand constitutes a basic principle of economics. But in the case of real estate, unbalanced supply and demand dynamics create sellers’ and buyers’ markets.

What makes a sellers’ market?

The supply tipping point for the market to favor sellers occurs when the supply drops below six months of inventory. That’s the time it would take to sell all the inventory on the market at the current pace of sales if no other properties come on the market.

In a sellers’ market, buyers compete over homes, bidding high or entering a bidding war. At the least, they must move quickly because they know competition is fierce. This fast-moving market with fast-rising prices that benefits sellers.

What makes a buyers’ market? 

When the market shifts the other way and supply rises above six months of inventory. When inventory is high, buyers can move carefully and slowly, knowing homes are unlikely to sell quickly or another, similar home will be available soon. Buyers can make lower bids, especially on homes that have been on the market for a long time. They avoid bidding wars because there are more than enough houses to go around.When buyers can take their time and find a fairly priced home, they enjoy the advantage.

What makes a balanced market? 

Imbalanced markets grab most of the headlines. But balanced markets featuring an equilibrium between the demand for and supply of available homes for sale promote steady growth over the long term. Buyers tend to make reasonable offers on homes and sellers tend to accept them. Homes remain on the market for a moderate amount of time — neither lagging for months nor getting snapped up in mere hours or days. Home prices remain stable or grow at a steady pace.

What market are we in right now?

 Beyond the direct real estate statistics, many factors influence the housing market, including mortgage interest rates, inflation, employment, investment, construction, immigration, government assistance programs and the health of local and world economies. All these factors affect the supply and demand of the market, which in turn affects the balance of power between buyers and sellers. 

In Mesa County, we’re seeing a slow, but steady,  swing back towards the center. Indicators are moving in favor of both sellers and buyers. But the overall real estate market remains strong.