• there are few homes on the market; and
• the local economy is good.

These factors all operate to move home prices upward. In a seller's market, sellers can and do demand high prices for their homes and often dictate the terms of the contract. Also, in a seller's market, sellers often receive several competing offers and are in a position to insist that the buyer close quickly.

If you are a potential seller in a seller's market, you are likely to be able to sell quickly and at your price. On the other hand, if you are a potential buyer in a seller's market, you will want to be particularly careful that you do not rush into a decision that you may later regret. The best way to avoid "buyer's remorse" is to do your homework to ensure that you know what you want to buy and what you can afford.