Buyer or Sellers Market in Louisville, KY?

by John on February 22, 2012

For Single Family Houses or Multi-family Investment Properties? More than likely, when it is a Buyers Market for houses – It is a Sellers Market for multi-family investment properties and vice versa.

Consider this simple example of understanding one aspect of “markets”:

More homes for sale than buyers obviously creates a “Buyers Market”. With that being said, and at the same time, what is likely to be the market with multifamily properties? Not always, but often the case – When it is a Buyers Market with homes, It is a Sellers Market with multifamily properties. Let’s break this down a little more to understand it a lot more…

When people aren’t buying homes – it is more than likely because they can’t. Speaking in broad and general terms, the economy drives the market more than anything. When times are good, and employment is steady – people are making moves. When times are tough and employment is uncertain – people sit tight and wait to make a move. Often, when times are tough, so is a buyer’s borrowing power. If buyers can’t borrow…buyers can’t buy. If buyers can’t buy – many who don’t already own homes have to rent. When more people need to rent – demand on rental properties goes up. When demand exceeds supply – Prices Go Up. So in the case of renters…their rent goes up. Landlords ask more for rent and get more for rent! When rental income increases, the landlords properties increase in value and landlords experience a “Sellers Market”.

Just reverse this scenario and see how a Single Family Housing market shifting to a “Sellers Market” causes a shift in a Multi-family Investment Properties “Sellers Market” to a “Buyers Market”.

People begin to buy homes…and therefore vacate rental properties. Demand decreases for rentals. Landlords lower prices to compete for the hard to get tenants. Multi-family Investment Properties lose value…and this market shifts to a “Buyers Market”. All this, while demand increases in the Single Family Housing market creating a “Sellers Market”. Sounds simple? We think so…but then understanding the markets is what we do!

Thinking about making a move in Louisville, KY? Give us a call and make your best move ever!

 

 

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