We’ve waited a long time to see this!!

Housing inventory at an all time low!

Months Supply and Impact on Price

According to dictionary.com:

“The relationship between supply and demand determines the price of a commodity. This relationship is
thought to be the driving force in a
free market.”

In real estate, supply and demand is represented as the current month’s supply of homes for sale (the number of homes for sale divided by the number of homes sold in the previous month).

Economists are using the guidelines as follow…

  • 1-4 months supply creates a sellers’ market where there are not enough homes to satisfy buyer demand. Appreciation is guaranteed.
  • 5-6 months supply creates a balanced market. Historically home values appreciate at a rate a little greater than inflation.
  • 7-8 months supply creates a buyers’ market where the number of homes for sale exceeds the demand. Depreciation follows.

Currently in the Triangle we have roughly 4.2 months of inventory. This number fluctuates based on your City and Neighborhood but overall we have made the switch from a buyer’s market to a seller’s market.

In most parts of the country, home values are rising. This is for two reasons:

  1. According to NAR’s latest Existing Homes Sales Report, raw unsold inventory is at the lowest level since December 1999 when there were 1.71 million homes on the market.
  2. According to this month’s Pending Sales Report from NAR, houses going into contract reached levels last seen in April 2010 which was the month the Home Buyers’ Tax Credit expired.
Published by Michelle Melvin and tagged with: | No Comments