NEW YORK (TheStreet) -- Everyone knows rising home prices make it a sellers' market. Sellers can afford to hold out for top dollar because buyers are rushing to beat higher prices.
Well, not exactly. Zillow.com, the home listing and data firm, has a more refined way of looking at it, defining a sellers' market as "not necessarily one where home values are rising, but rather one in which homes are on the market for a shorter time, price cuts occur less frequently and homes are sold at prices very close to (or greater than) their last listing price."
The buyers' market is, as you'd expect, the opposite: "Homes for sale stay on the market longer, price cuts occur more frequently and homes are sold for less relative to their listing price."
Prices may indeed be rising quickly in sellers' markets and falling in buyers' markets, but price change alone is not the key factor.
Zillow's approach makes for some intriguing conclusions about conditions as the spring selling season gets rolling. The West Coast is a seller's market, while the Midwest and East Coast favor buyers. In the recent post-crisis years, the whole country tended to move in the same direction, but now, in a return to more typical behavior, local variations are reasserting themselves, Zillow says.
The hottest sellers' markets: San Jose, Calif., and San Francisco; San Antonio, Texas; and Los Angeles. The hottest for buyers: Cleveland, Ohio; Philadelphia; Tampa, Fla.; and Chicago.
"Relatively strong job markets in the West are helping spur robust demand, which is being met with limited supply, causing rapid home value appreciation and giving sellers an edge," Zillow Chief Economist Dr. Stan Humphries says.
"In the East, housing markets are appreciating a bit more slowly, and homes are staying on the market longer, which helps give buyers the upper hand. In general, buyers in sellers' markets this spring can expect tight inventory, increased competition and a greater sense of urgency. Sellers in buyers' markets may need to be prepared to lower their asking price, or to wait longer for the perfect buyer to come along."
While buyers and sellers tend to focus on a home's price, location and features, it's worth spending some time to gain insight into the local market. As a buyer, you are competing with other buyers, and if they understand it's a sellers' market and you don't, one of them might strike a bargain while you're still hanging tough. Sellers, too, need to know whether they can safely hold the line or compromise.
A good real estate agent can offer some guidance. But remember, an agent may prefer to give up a little commission to sell the home in weeks rather than months. Advice to be "realistic" -- to pay more if you're a buyer or settle for less as a seller -- may be an effort to speed the process rather than get the best possible deal. So it's best to develop your own view of who has the upper hand when you start to haggle.