🏡 Buyer vs Seller Market: Who Defines the Rules?

Ever wondered who came up with the rules for what makes a Buyer’s Market or a Seller’s Market? It wasn't real estate agents who decided. Instead, it's based on old economic theory that experts have refined over time. So, let's break it down.

📚 Supply and Demand: The Basics

Buyers' and sellers' markets depend on supply and demand. This concept dates back to classical economists. Adam Smith discussed it in *The Wealth of Nations* (1776). Alfred Marshall expanded on it in the *Principles of Economics* (1890).

It's pretty simple:

●      High demand + low supply = Seller’s Market (Sellers have the upper hand, so prices go up).

●      High supply + low demand = Buyer’s Market (Buyers have the power, so prices drop).

These economic truths are still the foundation for understanding real estate markets.

🏦 How the Real Estate Industry Adopted These Principles

In the mid-20th century, real estate experts began applying these principles in local markets. The National Association of Realtors (NAR) also defined them through reports and training. Over time, industry experts found a key benchmark to identify market conditions.

Here's how it works:

●      Less than 4 months of inventory: Seller's Market (prices are likely to rise).

●      4–6 months of inventory: Balanced Market (things are pretty even).

●      More than 6 months of inventory: Buyer’s Market (prices might drop).

These metrics are still used today across MLS systems and market analyses.

💡 Why it Matters to You

Understanding whether it’s a Buyer’s Market or a Seller’s Market helps you make smarter real estate decisions—whether you’re buying, selling, or investing.

Three Key Benefits of Knowing the Market Type:

1. Better Pricing Strategy: Sellers can price their homes competitively in a buyer's market, while buyers can negotiate more effectively.

2. Timing Your Move: Knowing the market type helps determine whether it’s better to buy or sell now or wait for conditions to change.

3. Negotiation Leverage: Buyers and sellers can adjust their expectations and strategies based on market conditions, leading to more successful outcomes.

Curious about what type of market Hattiesburg is in right now? 📲 Reach out, and let’s dive into the latest stats together!

Beth Scharwath
RE/MAX Real Estate Partners
(601) 296-2001