Soft Market

Categories: Trading

A market where it's hard to sell. Basically, a buyer's market.

You bought a sculpture by a famous artist a few years ago. It cost you $2 million. Since then, news has come out that the artist was part of a cannibalistic blood cult. Now he's living as a fugitive in some out-of-the-way country and no one wants to admit they have his art in their homes or in their museums. Meanwhile, you have to sell. You need to bring in some cash quickly, due to your own legal troubles (not related to a cannibalistic blood cult, but still).

You try to sell the sculpture, but can't find anyone willing to buy. Soft market. You're not likely to get anything like your $2 million back.

One of the most famous soft markets in history came up after the financial crisis of 2007-2008, when real estate prices in many areas collapsed, seemingly overnight. People ended up with homes that they couldn't sell for anything near what they paid for them.

Bubbles like that offer extreme examples. But soft markets appear any time supply outstrips demand. It becomes difficult for sellers to get a decent price for the asset they're trying to unload.

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