Who benefits from a rising or falling market?

There are 3 types of market in real estate - a seller's market, a buyer's market and a balanced market.
In a seller's market, demand exceed supply and often times buyers are willing to over-pay for a house, driving prices up.
In a buyer's market, supply exceeds demand and sellers compete for fewer buyers, driving prices down.
In a balanced market, supply and demand are roughly equal, and there's a healthy balance of buyers and sellers in the market place.

A seller's market is more advantageous to people who are buying down (price-wise) or people who are exiting the market (I.e.  moving to another geography or seniors moving into a retirement home or rental housing etc.).

And conversely, a buyer's market is more advantageous to people who are buying up (price-wise) or people who are first time buyers.

Let me explain.

In a seller's market, a seller is often times going to get a better price than normal, for the sale of your house.
In the case of someone buying down (I.e. "empty-nesters"), they're looking for a smaller, less expensive place as their next place to live.
 
For the purposes of this example, let's say in a seller's market, all houses are selling at a 10% premium compared to a normal, "balanced" market.
The Smiths live in a nice 4 bedroom home, which in a balanced market, is worth $500,000.
So a $500,000 home sells for $550,000 in this seller's market.

The Smiths are empty-nesters and want something smaller so they are buying down to a house normally priced at $300,000, and in this seller's market, sells for $330,000.
So the Smiths made an extra $50,000 on the sale of their home and paid an extra $30,000 on their new home. The net difference is $50,000 minus $30,000 equals a gain-in-pocket of $20,000.

Let's look at the buyer's market.
For the sake of discussion, let says all homes are selling at a discount of 10%.
If the Smiths were buying up in this market, they would sell their $500,000 at $450,000.
If they're buying up to a house normally priced at $750,000, they purchase it at $675,000.
So by buying up in a buyer's market, although the Smiths "lost" $50,000 on the sale of their house, they far more than made up for it by saving $75,000 on their new house purchase!
The net difference is they saved $75,000 on their new house price, despite losing $50,000 on their current house price, making a net gain in their favour of $25,000!

And if you were a first time buyer coming into the market in a buyer's market, in this example, you bought your new house at a 10% discount, right off the bat!

So in this changing market, if the signs continue to indicate a buyers market, for those of you wanting a little bit more house, this is clearly this time to do it.