Buyer’s market – definition and meaning

A Buyer’s Market or Soft Market is one in which the buyers call the shots because demand is lower than supply. This means purchasers are in a stronger position than sellers. In other words, it is easy for buyers to negotiate better deals in a buyer’s market. Buyers are also happy because prices are relatively low.

The opposite of a buyer’s market is a seller’s market. In a seller’s market, demand outstrips supply and prices rise. In a buyer’s market goods take a long time to sell. Conversely, in a seller’s market, goods take a short time to sell.

We commonly use the two terms in real estate. Real estate is the buying and selling of property.

After property prices have peaked, real estate shifts towards a buyer’s market. The ratio of total properties on sale versus the number of buyers tilts in the buyer’s favor. In other words, supply exceeds demand.

A buyer’s market is a slow market

In real estate, several factors may affect prices, supply, and demand. Factors also affect employment, investment growth, legislative changes, interest rates, and new construction. All these factors push the market either in the buyer’s or seller’s favor.

In a buyer’s market, purchasers can take their time because they know things will move slowly. In other words, they know that what they saw last week will probably be on sale for a while.

In a buyer’s market, sellers may need to invest more in marketing and property improvements to attract the limited number of buyers, increasing the overall time and cost of selling a property.

Additionally, a buyer’s market often leads to a more diverse range of available properties, as sellers are motivated to list homes that might not have been considered for sale in a more competitive market.

According to Cambridge Dictionaries Online, a buyer’s market is:

“A ​time when there are more ​goods for ​sale than there are ​people to ​buy them, so ​prices are usually ​low.”

Example of seller’s or buyer’s market

Imagine you live in a town with 200,000 dwellings, and that 6,000 of those are for sale.

John Doe Inc. is the largest employer in your town. John Doe has just announced it is closing down, leaving thousands of people out of work.

Many soon-to-be ex-John Doe employees will subsequently be putting their homes on the market. People will be moving to another town with better job prospects.

Within a few weeks, the number of houses for sale increases to 12,000. In other words, supply doubles.

Job prospects in your town are poor. Consequently, few people are rushing to move in from outside. Given that employment prospects are weak, very few locals want to buy a new home. In fact, not many people can currently afford a new home. In other words, demand is low.

Those who want to buy a home have the upper hand because it is now a buyer’s market. Supply has increased while demand has declined.

If John Doe Inc. announced an expansion with more jobs, the opposite would occur. Demand for homes would rise rather than fall. It would become a seller’s market.

We can use the term for any market, such as oil, coffee, milk, automobiles, gold, etc. If supply has risen and demand declined, it becomes a buyer’s market.

Compound phrases with ‘market’

The terms ‘buyer’s market’ and ‘seller’s market’ are compound phrases with the word ‘market.’ There are many such compound phrases in business English, which describe the current state of a market. Here are six of them:

• Soft Market

Supply is greater than demand, so prices are relatively low and products take longer to sell.

• Sluggish Market

Similar to a ‘soft market’. The market is slow moving with relatively little activity. There is very little growth (perhaps none).

• Volatile Market

This type of market is unpredictable. Prices are moving up and down rapidly. We do not know what is going to happen next. Investors who are risk averse tend to avoid trading in such markets.

• Saturated Market

The market is fully exploited, i.e., there is no more room for any more suppliers or manufacturers. There is little or no room for growth or additional sales.

• Bullish Market

A market condition indicating rising prices and investor confidence, typically seen in stock markets.

• Bearish Market

A market condition characterized by falling prices and often reflecting investor pessimism.

Other languages

The notion of buyer’s and seller’s markets exists all over the world. Hence, the term is commonly used in other languages. Here is a translation of ‘buyer’s market’ in some leading languages:

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Video – What is a Buyer’s Market?

This video, from our YouTube partner channel – Marketing Business Network, explains what ‘Buyer’s Market’ means using simple and easy-to-understand language and examples.

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