Savannah Ga Homes - Just What Is a Buyer's Market?

  Aside from regions which are depressed or regions where prices simply soared insanely, in most regions a buyer’s market means an appreciation adjustment - prices will appreciate at a lower rate or remain flat. Some buyers tend to think a buyer’s market signals an opportunity to get properties way below market value. In the Savannah, Ga. market and other similar markets, this is not the case.

In the beginning of a downturn when prices are adjusting and sellers in a fairly stable market have set their prices 5% to 10% higher than the current market will bear, a buyer may in fact get a home under market prices, but markets adjust quickly; sellers get the drift and begin setting prices at more realistic rates.

What has happened in these otherwise stable markets is not a collapse or drastic reduction in prices from the previous years, rather it means that appreciation is slowing – say from 8-9% to 4-5%.

The real advantage to buyers in these markets is that the buyer will not OVERPAY, or shouldn’t. In a buyer’s market I usually determine an estimate of market value by looking at what has sold in the last three months or so, rather than use the one year time-frame commonly used when a trend has been steady for a while.

If there is no evidence that prices are rapidly falling, then homes sold in the last three to six months ought to be indicative of present home values. This is all an estimate on my part and a licensed appraiser can give a closer evaluation, but for a buyer to assume sellers will take 20% below the current estimation of prices based on recent sales is probably a wrong assumption, especially if the number of homes sold is close to the number of homes sold in previous years.

There is a big difference between slowing appreciation and huge price reductions. In areas hit hardest by the downturn in real estate prices you only have to look at the history of appreciation in these areas to understand why – double digit appreciation can’t be sustained and those areas that went up the highest and quickest will be the hardest hit. But you can’t use their example to create a buying strategy in a more historically stable market where prices didn’t soar as high.

What you can do is take advantage of a period of time where appreciation has slowed, buy a home at a locally reasonable price and most likely do well over the next five years or so.

Besides, like I said in a previous blog, the home is being sold to live in, so getting too wrapped up in national news about price reductions, and pipedreams of finding a home way below market value, may cause you to miss the best deals where you simply buy the right home for you at a good, reasonable price at the right time.