A Balanced Market In the ideal local real estate market, there should be a balance between demand for homes and the supply of homes available for sale. Although there is no exact benchmark to measure balance, there are ways of knowing if a local real estate market is close to being a balanced one.A local market has an adequate supply of homes for sale if houses on the market sell within six months – even higher in coastal areas where 12 months is considered a balanced market.A Seller’s Market When the market demand for homes in a particular area is high and there is a shortage of homes available for sale, the balance of power in the market shifts toward the seller. With excess demand in the market for homes, sellers can wait for offers on their property to reach (or exceed) their minimum selling price.We were in a seller’s market in early 2005 at the height of the real estate boom in most of our nation’s housing markets. Housing was “hot,” particularly in ocean resort towns. This prolonged excess demand for properties exerted substantial upward pressure on prices A Buyer’s Market When demand for new and existing homes is weak and there is a glut of properties available on the market, the uipper hand in negotiations switches to buyers.Buyers now have a much wider choice of properties from which to choose and are often able to negotiate a price that is lower than the listed price.Sellers do all they can to sell their homes—even offering to pay some of the upfront costs of the buyers, reducing the listing price, and offering other incentives to attract buyers.Demand for Property People purchase homes for a variety of reasons. Whether a second-home buyer or a real estate investor, there are a variety of reason why and where people purchase coastal property.Put all these factors together and you have the local demand for property.Demand for real estate influences the willingness and ability of households to make home purchases.All factors influencing demand can be grouped into four categories: population factors, home-buyer wherewithal factors, investment factors, and purchase-cost factors.