Definition of Buyers' Market

The Vancouver Sun posts a dry, rational analysis of buying real estate. Shocking, really.

This is a semantic issue. Technically, as soon as sellers are at a disadvantage in the transaction negotiation, it's a buyers' market. The fact that the Van Sun chooses to push the definition out implies they are trying to dissuade people from grabbing for a falling knife based purely on the delicious term "buyers' market". Which is rather different of them. It's not a buyer's market until prices drop

It's not a perfect analogy but let's compare real estate to the stock market. Equities traders look at volume as an indicator of interest in the market or in a particular stock but many prefer to sit on the sidelines until a trend is con-firmed by price movement. Trading volume is more useful for catching illegal insider trading rather than as a signal to buy or sell. A sudden surge in volume, followed quickly by news that moves the stock price up or down, alerts the securities commission to launch an investigation.

Volume can also suggest a stock or index is trading on momentum, rather than fundamentals, a situation value investors tend to avoid. Real estate speculators may want to flip a property in a market driven by momentum, but the vast majority of homebuyers are value investors, hoping to acquire a quality asset at a good price.

And there is a big speculative component to this, given that owner-occupier presumably intends to gain when they sell. Because if they assumed they would lose, they'd be inclined to rent instead, rather than be faced with a balloon payment of unknown size to sell.