In real estate, a buyer’s market is a situation where there are more properties for sale than buyers ready, willing and able to buy them. In other words, supply is greater than demand, which makes prices go down and gives buyers more leverage over sellers.
For more than five years, since the real estate market crashed in 2007, we’ve been hearing and reading that it’s now a buyer’s market. During the boom, sellers could slap any price on a property, as long as it was just a little over what the last comparable house went for, and pretty much command that price. Now most sellers have to accept that it is not them, it’s the market, that is whatever buyers may exist for their house, who will determine its fair market value.
There are of course exceptions to any rule, and it is NOT a buyer’s market for every property. There are some properties and indeed some entire areas where sellers can still call the shots. The most obvious exception to the buyer’s market rule is Manhattan, which is essentially a perpetual seller’s market. There will apparently always be more people who want to own in Manhattan than there are properties for sale, keeping prices high and leaving buyers without much leverage.
The Princeton area: not Manhattan, but still a destination for many savvy homebuyers
While the Princeton area is hardly Manhattan, it is a desirable destination for a lot of homebuyers. For one thing, this is the only area of the U.S. where you can live in the country while commuting to two of the top five cities (New York and Philadelphia). And it’s possible to do this by train, bus or car. The northern Jersey shore is also a quick hour away.
The second draw to the Princeton area is the choice of several highly ranked public high schools here, including Hopewell Valley Central (serving Hopewell and Pennington), West Windsor-Plainsboro, Princeton (serving Princeton and Cranbury) and Lawrence. There are also many fine private schools serving the Princeton area.
Finally, there is the appeal of Princeton itself, a small town with a big university in it. Princeton University and the other colleges in the area, Rider University in Lawrenceville and the College of New Jersey in Ewing, provide thousands of good jobs as well as important academic, athletic and artistic opportunities for the greater community.
Cranbury, another strong market
These positives add up to make certain locations in the Princeton area attractive enough that they remain to some degree seller’s markets, where buyers will not be successful lowballing a property, because another buyer can be found who will pay more.
For example, I just got a buyer under contract for a beautiful newer (built in 1999) house in Cranbury. Cranbury is an extremely charming pre-Revolutionary War (1698) town with only about a thousand dwellings, most of them historic and very few of them built in the last twenty years. Kids in Cranbury go to one school, the Cranbury School, from K-8, and then attend Princeton High School. Almost all Cranbury K-8 students can walk or bike to school in this small town with a lifestyle somewhat out of time.
There are only a handful of neighborhoods in Cranbury with newer houses, and those houses are always in demand. When an agent in my office listed one of these newer houses last month, there was a lot of interest and the house got a lot of showings. My buyers had to act quickly and bid strongly if they wanted to buy this house.
telling a buyer that it’s not a buyer’s market
I happen to enjoy representing buyers. I am an aggressive buyer’s agent and I pride myself on not letting my buyers pay more than they have to for the house they want. However, there are times when you have to tell a buyer that the house he likes is priced right, it’s going to sell for about this much, either to you or to someone else, and it’s going to sell quickly.
It’s hard to tell a buyer they don’t have much leverage in making their offer. Everybody knows it’s a buyer’s market, right? But not for every house. A newer house in Cranbury in perfect condition, priced right? There are more buyers for that particular product than there are sellers who can supply them. You see this play out in Princeton as well, where the housing inventory is also substantially historic, and newer homes are rare.
Even in this economy, it’s not always a buyer’s market. Some sellers of desirable homes in desirable locations are able to extract more for their properties because of their rarity. Buyers who want those houses will have to accept they won’t be able to negotiate as much as they would on a less desirable property.