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Housing inventory is a measurement of the number of homes that are on the market at a given time. We can look at inventory broadly in a market or in different price ranges to find out which section of the market is hottest and which presents more buyer opportunity. In this video I explain how inventory is measured and how the level of inventory affects buyers and sellers.
A balanced level of inventory is typically defined as three to four months of available homes based on the rate at which homes are being sold. At this level, neither buyers nor sellers have a defined advantage and the market is generally stable. If inventory dips to one or two months’, buyers are forced to compete for the relative lack of homes and sellers have stronger pricing and negotiation leverage. When buyers experience an inventory shortage they tend to make offers more quickly with less negotiation - this puts upward pressure on prices and helps homes sell more quickly.
A buyer’s market, on the other hand, occurs when there is a surplus of inventory - say five to seven months or more. The tables turn and a buyer gains the leverage in this situation. Instead of buyers competing for the very best listings, sellers have to compete for the best qualified purchasers. If there is only one qualified buyer for every 5 or 7 homes on the market, he or she is a hot commodity and sellers will do what they can to secure that buyer.
WE ARE HERE TO PROVIDE VALUABLE INFORMATION WHETHER YOU’RE BUYING OR SELLING.
Whether you’re buying or selling, we are here to provide valuable information like this to help you make the best decisions for your unique situation. If you have any questions for us, don’t hesitate to give us a call or send us an email. We would love to hear from you.
