Definition
The term buyer's market is used to describe a condition whereby the supply of an asset exceeds demand, thereby providing buyers with negotiating leverage. While a buyer's market can apply to the purchase of any asset, it's oftentimes associated with the real estate market.
Explanation
When the supply of goods or services available to the market is in excess of the demand for those same goods and services, the market is said to be a buyer's market. This type of market allows those looking to purchase an asset with additional leverage when negotiating price. The reverse of a buyer's market is a seller's market, which is characterized by a surplus of buyers.
The idea of a buyer's or seller's market originates from the law of supply and demand, which states that an overabundance of supply will put downward pressure on price. Conversely, prices will increase when demand outpaces supply. When a real estate market is a buyer's market, homes will take a longer period of time to sell and buyers will typically offer less than the seller's asking price.
Related Terms
The term carrying charge market is used to describe a condition where spot prices are lower than the long-term price of a futures contract. A carrying charge market is considered a normal market condition.
Moneyzine EditorNovember 6th, 2024
The term equilibrium price refers to a state in which the quantity of goods supplied is equal to the demand for the same goods. Prices are typically stable for a product when they reach the equilibrium price.Moneyzine EditorNovember 6th, 2024
The term inverted market is used to describe a condition where spot prices are higher than the long-term price of a futures contract. An inverted market is considered an abnormal market condition.Moneyzine EditorNovember 6th, 2024
The term fast market is used to describe a condition whereby the rapid trading of a security results in a delay in the transmission of data concerning sales and price quotes. While a fast market can affect common stocks, the term is more often associated with the trading of options.Moneyzine EditorNovember 6th, 2024- The term seller's market is used to describe a condition whereby demand for an asset exceeds supply, thereby providing sellers with negotiating leverage. While a seller's market can apply to the sale of any asset, it's oftentimes associated with the real estate market.Moneyzine EditorNovember 6th, 2024
