If the demand is greater than the supply it is a sellers market. The reverse, it's a buyers market. Some times we experience a 'balanced' market. So here's how to figure it out. In real estate, if the supply of homes in a given price range is under 6 months, it is a sellers market. If the supply is around 6 months it's a balanced market. Supplies over six months is a buyers market.
Real estate practitioners talk about 'absorption'. That means that if you divide the current inventory by the number of average monthly sales for the last 12 months, you get the months supply.
Right now (8/1/2017) in Livingston County we are overall in a sellers market with a total absorption of 3 months, across ALL price ranges. But in the $151,000-$200,000 range (popular with first time home buyers), the months supply is only 1.5 months. You got it - Sellers Market!!
$401,000-$500,000 is a 5.7 month supply, or a balanced market. Go to $501,000 - $750,000 and we have 15.6 months of supply - a very strong buyers market. So you need to have a better reference point than just your whole county, or township, or city.
We can take this a step further and break down by school districts or even neighborhoods if the neighborhood is big enough. It doesn't work well in a community of 60-70 homes.
image courtesy of renjith krishnan/freedigitalphotos.net
No comments:
Post a Comment