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Inventory Balance

March 23, 2017

 

Questions:

  1. What exactly is “housing inventory” and how is it calculated?

  2. How do you know if it is a Buyer’s market, Seller’s market or neutral market?

When deciding to sell or buy a home it is important to discuss the marketplace with your Realtor to understand the current climate.

Currently the inventory in San Diego County is currently less than two months making it a Seller’s market HOWEVER, interest rates are still historically low giving Buyers good reason to purchase.

How to Compute Months of Inventory

  1. Find the total number of active listings on the market last month.
  2. Find the total number of sold transactions for the last month.
  3. Active listings divided by the number of sales = the number of months of inventory remaining.

Buyer’s Real Estate Markets

In these markets there are more homes available for sale (higher inventory) than buyers to purchase them.

In Buyer’s markets serious sellers are often more willing to negotiate. This means you may be able to buy a home for less than list price, and the seller might be willing to pay some of your closing costs and make more repairs.

Signs of a Buyer’s Market

  • More than six months of inventory is on the market.
  • Prices are reduced before going into escrow.
  • Sale prices are lower than listing prices.
  • Fewer buyers are purchasing, resulting in lower closed sale numbers.
  • Median sales prices are declining.
  • Days on the market are longer.

Seller’s Real Estate Markets

In these markets there are more buyers than available houses to buy.

In Seller’s markets serious buyers are often willing to pay more than list price, tighten or and/or waive contingencies. Properties usually receive multiple offers and don’t stay on the market very long.

Signs of a Seller’s Market

  • Less than six months of inventory is on the market.
  • Prices are not reduced before going into escrow.
  • Sale prices are higher than listing prices.
  • More buyers are purchasing, resulting in higher closed sale numbers.
  • Median sales prices are increasing.
  • Days on the market are shorter.

 

Neutral Real Estate Markets

These markets are balanced. Typically, interest rates are affordable and the number of buyers and sellers in the marketplace are equalized. The scales don’t tip in either direction.

Signs of a Neutral Market

  • Three to six months of inventory is on the market.
  • Sale prices are close to listing prices.
  • Sales numbers have stabilized.
  • Median sales prices are flattened.
  • Days on the market are 30-60 days.

Please contact me to discuss the current climate and how you can best use it to your advantage! Just send me an email or call me at 619-888-2117. 
 

 

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