Buyer’s Market

Published Feb 4, 2023

Definition of Buyer’s Market

A buyer’s market is a market in which the supply of goods or services exceeds the demand. That means, overall, buyers have more bargaining power than sellers and can often get better deals. This is in contrast to a seller’s market, in which the demand exceeds the supply, and sellers have more bargaining power.

Example

Let’s look at the housing market to illustrate this concept. In a buyer’s market, there are more houses for sale than there are buyers. That means buyers have more options to choose from and can often negotiate a lower price because sellers may have a hard time finding other buyers for their property. On the other hand, in a seller’s market, there are more buyers than there are houses for sale. That means the sellers can ask for a higher price, and buyers have to compete with each other to get the house they want.

Why Buyer’s Markets Matters

Buyer’s markets are important for buyers and sellers alike because they define who has more bargaining power. In a buyer’s market, buyers can often get better deals than they would in a seller’s market. On the other hand, seller’s markets are beneficial for sellers because they can generally ask for higher prices. Thus, it is important for buyers and sellers to be aware of the current market conditions in order to make the best decisions.