Buyer's Market

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

carrying charge market, equilibrium price, inverted market, fast market, seller's markett