What financial situation can result in a buyer's market?

What financial situation can result in a buyer's market?

• A. Many buyers investing in real estate
• B. Economic downturn leading to increased foreclosures
• C. Consistent growth in home values
• D. Low construction costs

Answer: (B)

A buyer's market typically arises when there are more homes available for sale than there are buyers interested in purchasing them. This imbalance often occurs during periods of economic downturns, which can lead to increased foreclosures. In such situations, homeowners may be unable to keep up with mortgage payments, prompting many to sell their homes quickly, often at reduced prices. Consequently, the influx of properties on the market outstrips buyer demand, giving buyers more negotiating power and options. In scenarios where there is an economic downturn, the rise in foreclosures contributes to a surplus of available properties, which can depress prices and create conditions favorable to buyers seeking good deals. This dynamic is central to the concept of a buyer's market.

A buyer's market typically arises when there are more homes available for sale than there are buyers interested in purchasing them. This imbalance often occurs during periods of economic downturns, which can lead to increased foreclosures. In such situations, homeowners may be unable to keep up with mortgage payments, prompting many to sell their homes quickly, often at reduced prices. Consequently, the influx of properties on the market outstrips buyer demand, giving buyers more negotiating power and options.

In scenarios where there is an economic downturn, the rise in foreclosures contributes to a surplus of available properties, which can depress prices and create conditions favorable to buyers seeking good deals. This dynamic is central to the concept of a buyer's market.