Buyer’s Market vs Seller’s Market: Where to Invest

To discover more about the buyer’s market vs seller’s market—and see what the situation looks like in 2022—you should check out this guide.

 Table of Contents 

1. Current State of the Real Estate Market
2. Buyer’s Market vs Seller’s Market: The Difference
3. Buyer’s Market: Worth Investing?
4. Top 5 Buyer’s Markets
5. Seller’s Market: Worth Investing?
6. Top 5 Markets Seller’s Markets
7. Final Thoughts

 The most precise distinction of the US real estate market today is the division into the so-called seller’s and buyer’s market.

On that note, real estate investors must be fully aware of which market they’re operating in currently, as it can help with their future investment strategies and planning.

There are certain advantages and disadvantages that you should consider when it comes to both “types” of real estate markets before deciding on purchasing any property.

So, to make a clear distinction between buyer’s market vs seller’s market—and figure out which of the two you’ll be investing in and anticipating high returns in 2022—stay tuned until the end.

Current State of the Real Estate Market

Before we go further, we should address an issue that can potentially influence not only the further development of this guide but, ultimately, your decision.

The question we’ll try to answer here is, how is the market doing today?

There has been intense speculation about how the pandemic had such a substantial impact on the home market—and it was hard not to compare it to the uncertainty of the 2007 crash.

It seems that the “critical” period has passed. However, the 2022 home market is dealing with another obstacle that is primarily impacting homebuyers—and that would be high mortgage rates.

Real estate investors are currently struggling with being able to afford homes that are in a certain price range. Even the most “basic” single-family homes may now cost much more than they used to. The high prices make it difficult for real estate investors who are not in the most favorable financial situation to take out a mortgage.

The bottom line is this:

Real estate market trends are always changing—which is why the investment strategies need to be “adapted” to such changes.

During the first quarter of 2022, property prices went up by as much as 18.7%; the same can be said for mortgage rates. However, economists and specialists report that we’re currently not at risk of experiencing the so-called housing “bubble.”

The prices will continue to increase in 2022—but we can expect things to “cool down” by the beginning of 2023.

Buyer’s Market vs Seller’s Market: The Differences

Here, we’ll be dwelling on the buyer’s vs seller’s market—the differences between the two, as well as the advantages and disadvantages that may come with investing in each of them.

For starters, here are three important factors that can help you when determining if it’s a buyer’s market vs seller’s market:

• The number of homes available for sale
• Bidding and negotiations
• Prices at which they are sold

There are two sides here—the buyers, who are hoping to keep the costs low, and the sellers, who want to maximize their profits. And ultimately, it comes down to supply and demand.

In a “seller’s market,” there’s typically more than a handful of interested buyers and too few homes available for sale. In the “buyer’s market,” the situation is reversed—and the supply exceeds the demand.

It’s the easiest way to determine which market you’re operating in—by looking at it from a wider angle and factoring in the real estate inventory, recent sales, and trends.

It’s worth adding that, with a smaller number of buyers and a surplus of homes, home sellers are willing to negotiate to sell their investment property. And in a seller’s market, where there are fewer homes but many interested buyers, a massive price jump can be expected.

That brings us to the following question:

Is it a buyers or sellers market in US real estate?

Currently, the majority of the US real estate market is considered a seller’s market. It means that home prices keep going up while the real estate inventory remains tight.

If you are selling a house, that’s excellent news for you. But if you’re an investor looking to buy a new property—well, prepare for not-so-smooth sailing.

Buyer’s Market: Worth Investing?

In economic terms, a buyers market occurs when the supply exceeds the demand. In other words, there’s an excess of homes for sale that are currently available—but there is a shortage of potential buyers.

You’ll likely know that you’ve entered such a type of market climate if you experience a constant price drop between homes. That’s one of the most common strategies for attracting potential buyers.

Here’s how to navigate a buyer’s market:

If you’re a seller, do not rush to sell your property—unless it is a burning issue, that is. You should contact the real estate agent you’re working with and maybe agree to some changes in your strategy—or improvements on the property that can make it more appealing.

If you are a buyer, it’s your lucky day. The buyer’s market is a very favorable position to be in because you’ll get a hold of top-tier properties for a lot less money. It, in turn, means that you may save money—and can use the additional resources in your future investments.

The Pros and Cons

An obvious advantage of being a buyer in a buyer’s market is that the prices you encounter will likely be lower. Sellers are aware that their overpriced properties may remain unsold if they fail to adjust the prices to stay competitive.

Another plus is that once you find a lucrative investment in a buyer’s market, you’ll likely be able to close the deal quickly without having to spend a long time on the waiting list.

Of course, selling your home in a buyer’s market can be a challenging process—and you’ll need to be more accommodating and flexible to help sell your property.

Tips for Buyers and Sellers

You can definitely use some tips when navigating the so-called buyer’s market—both as a seller and a buyer.

If you’re a buyer, you should:

• Take your time with the research process
• Analyze comparable properties
• Pay special attention to the Days on Market metric

If you’re a seller, you should:

• Make some much-needed repairs to your property
• Put effort into marketing
• Don’t overprice it; keep the price competitive

We can all agree that if you’re a buyer in a buyer’s market—it’s definitely time to proceed with your investment plans.

Top 5 Buyer’s Markets

According to Mashvisor, here’s a list of the top five US markets that are currently considered buyer’s markets. The cities are arranged from the lowest to the highest in terms of median property prices.

Cleveland, OH

• Median Property Price: $261,492
• Average Price per Square Foot: $156
• Days on Market: 72
• Monthly Traditional Rental Income: $1,249
• Traditional Cash on Cash Return: 3.41%
• Traditional Cap Rate: 3.62%
• Price to Rent Ratio: 17
• Monthly Airbnb Rental Income: $2,240
• Airbnb Cash on Cash Return: 3.87%
• Airbnb Cap Rate: 4.05%
• Airbnb Daily Rate: $137
• Airbnb Occupancy Rate: 49%
• Walk Score: 55

Albuquerque, NM

• Median Property Price: $382,761
• Average Price per Square Foot: $208
• Days on Market: 70
• Monthly Traditional Rental Income: $1,388
• Traditional Cash on Cash Return: 2.32%
• Traditional Cap Rate: 2.39%
• Price to Rent Ratio: 23
• Monthly Airbnb Rental Income: $2,797
• Airbnb Cash on Cash Return: 4.76%
• Airbnb Cap Rate: 4.90%
• Airbnb Daily Rate: $125
• Airbnb Occupancy Rate: 64%
• Walk Score: 42

Detroit, MI

• Median Property Price: $387,315
• Average Price per Square Foot: $264
• Days on Market: 110
• Monthly Traditional Rental Income: $1,885
• Traditional Cash on Cash Return: 2.27%
• Traditional Cap Rate: 2.37%
• Price to Rent Ratio: 17
• Monthly Airbnb Rental Income: $2,255
• Airbnb Cash on Cash Return: 37%
• Airbnb Cap Rate: 47%
• Airbnb Daily Rate: $137
• Airbnb Occupancy Rate: 51%
• Walk Score: 51

Tampa, FL

• Median Property Price: $607,569
• Average Price per Square Foot: $336
• Days on Market: 67
• Monthly Traditional Rental Income: $2,258
• Traditional Cash on Cash Return: 2.74%
• Traditional Cap Rate: 2.80%
• Price to Rent Ratio: 22
• Monthly Airbnb Rental Income: $2,771
• Airbnb Cash on Cash Return: 2.56%
• Airbnb Cap Rate: 2.62%
• Airbnb Daily Rate: $142
• Airbnb Occupancy Rate: 51%
• Walk Score: 47

Philadephia, PA

• Median Property Price: $611,747
• Average Price per Square Foot: $374
• Days on Market: 95
• Monthly Traditional Rental Income: $1,992
• Traditional Cash on Cash Return: 2.85%
• Traditional Cap Rate: 2.94%
• Price to Rent Ratio: 26
• Monthly Airbnb Rental Income: $2,577
• Airbnb Cash on Cash Return: 3.29%
• Airbnb Cap Rate: 3.41%
• Airbnb Daily Rate: $142
• Airbnb Occupancy Rate: 51%
• Walk Score: 63

Seller’s Market: Worth Investing?

Now, let’s extend our “seller’s market vs buyer’s market” discussion to the seller’s market.

A sellers market happens when the demand exceeds the supply. In other words, there are not as many homes on the market, but interest among buyers and investors keeps growing.

In such a market climate, the emphasis is on the competition—and it’s everywhere. Buyers often need to compete, driving up the property prices in bidding wars, which puts sellers at a huge advantage.

Navigating a seller’s market can be difficult—and flat-out overwhelming—for buyers. Here’s what you can do:

If you’re a seller in a seller’s market, it’s clear that you are in a favorable situation. Namely, the property you are selling comes with a lot of potential to sell fast, and more importantly, you can get away with a higher asking price.

If you’re a buyer, on the other hand, be prepared to get involved in bidding wars.

It depends on how urgent your situation is. You’ll need to determine if it is necessary to act fast and offer a price that may be out of your budget or if you can afford to wait until the situation cools down and the competition clears.

The Pros and Cons

When it comes to the seller’s market, which is currently in effect in the US, we can all agree that the main issue is the extremely high home prices.

The high prices can be both an advantage and a disadvantage—depending on your position, of course, whether you’re a buyer or seller. If you are a seller, it allows you to price your home above average—and still be able to sell it.

Sellers can also look forward to faster home sales. Properties won’t stay on the market for too long; you’ll probably see new buyers lining up at your doorstep.

But if you are a buyer, you might get discouraged when you look at the prices and realize that most of them don’t fit your initial budget.

Tips for Buyers and Sellers

And now, let’s go through some vital tips for navigating the seller’s market.

If you’re a seller, you should:

• Try to organize and clean your home
• Set the asking price at fair market value
• Review multiple offers before deciding

If you’re a buyer, you should:

• Be prepared and act fast
• Be patient and don’t get discouraged
• Don’t make an offer just based on availability

As we mentioned, the US housing market is currently considered to be a seller’s market. The question that sparks interest among investors is when will it be a buyers market?

There’s no official information you could hold on to here—but we don’t predict any significant changes happening in the real estate market before 2023.

Top 5 Seller’s Markets

Here are the top five cities that, according to Mashvisor’s latest data, are considered to be in a seller’s market. The cities are arranged according to median property prices, from lowest to highest.

Dayton, OH

• Median Property Price: $207,495
• Average Price per Square Foot: $132
• Days on Market: 42
• Monthly Traditional Rental Income: $931
• Traditional Cash on Cash Return: 2.61%
• Traditional Cap Rate: 2.77%
• Price to Rent Ratio: 19
• Monthly Airbnb Rental Income: $1,937
• Airbnb Cash on Cash Return: 5.81%
• Airbnb Cap Rate: 6.13%
• Airbnb Daily Rate: $91
• Airbnb Occupancy Rate: 60%
• Walk Score: 41

Omaha, NE

• Median Property Price: $334,268
• Average Price per Square Foot: $181
• Days on Market: 32
• Monthly Traditional Rental Income: $1,350
• Traditional Cash on Cash Return: 2.42%
• Traditional Cap Rate: 2.52%
• Price to Rent Ratio: 21
• Monthly Airbnb Rental Income: $2,645
• Airbnb Cash on Cash Return: 4.81%
• Airbnb Cap Rate: 4.99%
• Airbnb Daily Rate: $132
• Airbnb Occupancy Rate: 59%
• Walk Score: 43

Spokane Valley, WA

• Median Property Price: $476,573
• Average Price per Square Foot: $241
• Days on Market: 32
• Monthly Traditional Rental Income: $949
• Traditional Cash on Cash Return: 0.25%
• Traditional Cap Rate: 0.26%
• Price to Rent Ratio: 42
• Monthly Airbnb Rental Income: $3,255
• Airbnb Cash on Cash Return: 3.93%
• Airbnb Cap Rate: 4.00%
• Airbnb Daily Rate: $131
• Airbnb Occupancy Rate: 61%
• Walk Score: 56

Salt Lake City, UT

• Median Property Price: $732,997
• Average Price per Square Foot: $482
• Days on Market: 26
• Monthly Traditional Rental Income: $1,452
• Traditional Cash on Cash Return: 0.66%
• Traditional Cap Rate: 0.67%
• Price to Rent Ratio: 42
• Monthly Airbnb Rental Income: $2,814
• Airbnb Cash on Cash Return: 2.02%
• Airbnb Cap Rate: 2.05%
• Airbnb Daily Rate: $117
• Airbnb Occupancy Rate: 63%
• Walk Score: 48

Santa Ana, CA

• Median Property Price: $854,776
• Average Price per Square Foot: $562
• Days on Market: 45
• Monthly Traditional Rental Income: $3,579
• Traditional Cash on Cash Return: 2.52%
• Traditional Cap Rate: 2.55%
• Price to Rent Ratio: 20
• Monthly Airbnb Rental Income: $5,035
• Airbnb Cash on Cash Return: 4.01%
• Airbnb Cap Rate: 4.07%
• Airbnb Daily Rate: $211
• Airbnb Occupancy Rate: 61%
• Walk Score: 97

Related: Home Selling Tips 2022: The Complete Seller’s Guide 

Final Thoughts

We’ve successfully closed the chapter on buyer’s market vs seller’s market. Let’s just briefly go through the key takeaways for good measure.

The buyer’s market refers to when there are enough homes but not enough buyers on the market. In the seller’s market, it’s the opposite.

The current real estate market climate in the US is leaning more towards a seller’s market. Among other things, it’s making it difficult for investors to agree on a fair price and make a profit.

It would be best to wait a bit longer and see how the situation plays out. But if you are in a tight financial situation, you will need to act fast and maybe accept a slightly higher asking price. Even if you do, there are still ways to walk away with a satisfactory profit.

To guide you through the process of locating investment opportunities in such a challenging market, you can rely on Mashvisor’s Property Finder. Our tool is designed to help investors explore the real estate market in search of the perfect location for their next investment.

To start using Mashvisor’s real estate investment tools, sign up for a 7-day free trial today, followed by 15% off for life.