Buyer's Market "Sweet Spot"


I have found it very interesting that when we are in a Seller's Market the Buyers will line up to buy, and will compete with each other often with multiple offers. But then when we are in Buyer's Market, like now, the Buyers are frozen with fear, and wont buy. What do they do? They watch and wait, and then they watch more and wait more. What are they waiting for? They are looking for some sign that we are finally at the bottom point of the bottom of the market. The problem is that predicting the bottom is tough. And furthermore, its also very difficult to identify the bottom when youre in it. No one rings a bell once we hot them bottom. No alarm goes off. But, there are signs to watch for the recognize the bottom, and what I call the Buyer's Market "Sweet Spot".


In our Park City real estate market there sure are signs that we are in the very bottom, and possibly have passed it. As realtors, we are always trying to advise our clients the best we can, and we work hard with our Park City Board of Realtors to get the best statistical data to our membership, and try to analyze that data the best we can. From what we have seen, we have passed that bottom point in many neighborhoods in our Park City market. So I try to take that information and knowledge and share it with our buyer clients, but its hard for them to beleive it. Im a very cautious salesperson, Im not pushy, and I try to give real, accurate, and conservative advice and recommendations. But I have to tell you, I have become tired of telling clients I think they are possibly going to miss out on the best deals, then watch them do exactly that. They watch, they wait, then they place themselves right out of the market.

So I have come up with the illustrated chart above to show them what it is I am talking about, and show them what it looked like when we were headed to the bottom, and what the bottom looks like, and what the next phase looks like. By defining these points of the market curve, we can more easily identify where exactly we are at in.

I call the bottom curve the Buyer's Market "Sweet Spot". If a buyer can recognize this portion of the market curve with their Realtor's help, they can make a great buy and feel good about timing their purchase well.

Here are the points of the Buyer's Market "Sweet Spot" and how to identify each point. Whe you apply these to your market, you should be able to define where your market is at, and where it is headed.

Point A:

- Number of All Distressed Properties reaching new highs
- Prices declining steadily in all neighborhoods
- Activity now increasing strongly in some neighborhoods

With an abundance of Short Sales, Notice of Defaults (NOD's) and Foreclosures and Bank Owned / REO properties, pricing in all neighborhoods is driven down to new lows. Now that the pricing is finally down significantly, the leading buyers start coming back and they start buying, mostly cash deals. Once a few start, more follow and there might even be a buying frenzy in the areas that went into the downfall first.

Point B:

- Distressed Properties
- Number of NOD's decreasing
- Prices still declining in many neighborhoods, but starting to increase in others
- Activity now increasing strongly in most neighborhoods

The distressed properties continue, but less attention on Short Sales and more focus on the Bank Owned / REO properties where a quick cash deal can be made. Pricing is still declining in many neighborhoods, but in some they have reached their bottom. In fact in some it may be to late - the best deals have come and gone. For the overly cautious buyers who have been watching and waiting, they may have watched and waited too long, and missed the best opportunities. At this point the good properties that do come up go very fast. The NOD's have now been decreasing steadily, so at this point the market can expect to start also seeing a decrease in foreclosures. The inventory is shrinking, and the "junk" is getting cleared out, making way for new properties to bump pricing up finally.

Point C:

- Distressed Properties
- Number of NOD's down, foreclosures down
- Prices now increasing in most market areas
- Activity still steadily strong in most neighborhoods

On my website Blog, I have more information on this and further explanations. I hope this can be of help to you in working with buyers in your market. I suggest visiting my EnjoyParkCity Blog to get more info. If you use my info I am providing, I would love to hear if it helps or not. If you have any other input, or suggestions, I would love to hear about that too!


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