How Do I Know If It’s A Buyer’s Or Seller’s Market?

How Do I Know If It's A Buyer’s Or Seller’s Market?

To determine whether a real estate market favours buyers or sellers, look at the months of inventory (MOI), days on market (DOM), and price trends.

A sellers’ market occurs when demand outpaces supply (under 5 months of inventory), while a buyers’ market occurs when supply outpaces demand (over 6 months of inventory).

Calculate Months of Inventory (MOI)

Months of inventory is the most reliable metric to determine market direction. It measures how long current homes for sale would last if no new homes were listed.

The Formula: Divide the total number of active listings by the number of homes sold in the last month.
Sellers’ Market: Under 5 months of inventory. Homes sell faster than they are replaced.
Balanced Market: 5 to 6 months of inventory. Supply and demand are equal.
Buyers’ Market: Over 6 months of inventory. Homes accumulate on the market.

Track Days on Market (DOM)

Days on Market tracks how long a property stays listed before going under contract.

Sellers’ Market: Low DOM (typically under 30 days). Homes sell rapidly, often after the first weekend of viewings.
Buyers’ Market: High DOM (frequently over 60 days). Listings sit, forcing sellers to wait for offers.

Analyse Price Trends and Bidding Behaviour

The final sale price relative to the listing price reveals who holds the negotiating power.

Sellers’ Market: Prices rise quickly. Homes sell at or above asking price. Multiple offers and bidding wars are common. Buyers routinely waive contingencies (like building inspections) to win.
Buyers’ Market: Prices stagnate or drop. Homes sell below asking price. Price reductions on active listings are frequent. Sellers willingly pay for buyer closing costs or repairs.

Observe Open Home Traffic and Media Signals

Foot traffic and local sentiment provide immediate, real-time context.

Sellers’ Market: Open homes are packed with buyers. Real estate news focuses on housing shortages, skyrocketing prices, and affordability crises.

Buyers’ Market: Open homes are quiet or empty. Real estate news highlights rising inventory, economic slowdowns, or interest rate pressures.

Summary Comparison

Indicator	Sellers’ Market	Buyers’ Market
Months of Inventory	Less than 5 months	More than 6 months
Days on Market	Short (Under 30 days)	Long (Over 60 days)
Asking vs Sale Price	Sold at or above asking	Sold below asking with discounts
Price Direction	Upward pressure / Rising	Downward pressure / Falling
Buyer Incentives	None (Buyers waive terms)	Many (Sellers pay repair costs)

To help pinpoint your specific position, I can analyse local data if you provide a few details. Could you tell me:

What suburb, or postcode are you looking at?
Are you planning to buy or sell?
What is your property type (e.g., standalone house, apartment, townhouse)?

Prepare to Impress

If you would like to know more about the benefits and how it could apply to your home, We’re happy to take your call and provide more insights.

How Do I Know If It’s A Buyer’s Or Seller’s Market?