Seller’s Market, Buyer’s Market, Balanced Market – If you follow real estate you have probably come across these terms. But, what do they actually mean?

Like most financial markets, the real estate market is cyclical and impacted by many factors (from interest rates to inventory levels, from global economic conditions to consumer confidence). These market labels (buyer’s market / seller’s market / balanced market) are based on statistical data and are used to describe what is happening in terms of supply and demand.

In short, a seller’s market occurs when there are more buyers than there are homes available for sale (when demand outweighs supply). On the other hand, a buyer’s market is the opposite – there is a surplus in listing inventory (supply outweighs demand). A balanced market occurs when there is the same number of listings available as there are potential buyers (supply and demand are balanced).

So, what does this really look like, and how does it impact buyers and sellers of real estate in Whistler and Pemberton? Let’s take a closer look and break down seller’s, buyer’s, and balanced real estate markets in more detail.

Seller’s Real Estate Market

Market conditions typically favour sellers who are able to list their homes for higher prices. Competition amongst a larger pool of qualified buyers often results in bolder offers, often with higher prices, shorter closing dates, fewer or no conditions, etc.

  • The number of people looking to buy is greater than the number of properties available for sale (Buyers > Listings)
  • Prices tend to be higher, often rising above the long-term averages
  • Days on Market numbers drop as homes sell quickly
  • Multiple offer situations are more likely (giving sellers negotiating power)

The statistical indicators for a seller’s market are:

  • The sales-to-actives ratio is 20% or higher over a sustained period*
  • The months of inventory falls to below 4 months**

Buyer’s Real Estate Market

Market conditions typically favour buyers. A large supply of listings available for sale means that buyers have their pick and can often come in at lower prices with little or no competition. Buyers, therefore, have more choices and more leverage to negotiate.

  • The number of homes available for sale outnumbers the potential buyers (Listings > Buyers).
  • Prices tend to be lower, often falling below the long-term averages
  • Days on Market numbers tend to increase as properties spend longer on the market
  • A housing surplus can lead to a rise in the number of price reductions that occur as sellers attempt to attract buyers

The statistical indicators for a buyer’s market are:

  • The sales-to-actives ratio falls below 12% over a sustained period*
  • The months of inventory rise to 6 months or higher**

Balanced Real Estate Market

Balanced market conditions occur when supply and demand are about equal. These market conditions result in a fairly even playing field for buyers and sellers.

  • The number of homes for sale is about equal to the number of buyers looking to purchase (Listings = Buyers)
  • Prices tend to fall in line with historical averages

The statistical indicators for a seller’s market are:

  • The sales-to-actives ratio is between 12 – 20% over a sustained period*
  • The months of inventory sits between 4-6 months**

What does this mean for you?

Whether you are a buyer or a seller, it is important to understand the conditions of the local market, both overall and in your specific area of interest.

Whistler and Pemberton are very small and nuanced markets so the various market segments can experience different market conditions at the same time. For example, there may be a seller’s market for chalets in Whistler while Phase II condos are experiencing a buyer’s market and Pemberton acreages are experiencing a balanced market. So, even if overall conditions suggest that it is a “buyer’s market” you could still find yourself competing against other buyers in a multiple offer situation because there is a lack of supply in the specific market sector you are interested in.

I hope this explains how overall market statistics are not always an accurate reflection of the conditions being experienced in a certain sub-market sector. It’s very important that you make sure to check in with me to help you understand how the specific market conditions for your area of interest may impact your decision to buy or sell real estate in Whistler or Pemberton.

Key Terms

Sales-to-Actives Ratio: A measurement of supply and demand that compares the total supply of homes for sale compared to the number of sales during a set period, revealing “demand”

Months of Inventory (MOI): A measure of the rate at which homes are selling, defined by the Canadian Real Estate Association as an indicator of “how long it would take to completely liquidate current inventories at the current rate of sales activity”.

Have more questions or want an update on a specific area of the market? Contact me any time.

*Sales to active ratio indicators provided by the Real Estate Board of Greater Vancouver

**Month of inventory indicators provided by the Canadian Real Estate Association