Updated: Sep 9, 2019
As I prepare to send out the most recent “Market Stats” to my database it makes me wonder: how helpful is this information? Do they care? Do they understand it? Does it cause confusion? Does it help people move forward with their real estate goals or merely paralyze them? So, from now on I have made the commitment to NOT just cut and paste the market stats, send them out, and wait for the phone to ring. Instead, I will focus on one aspect of the market and share some insight as to what is happening in our community.
According to Norada, as a general rule, 5 to 6 months of inventory is considered to be a normal or balanced market. Over 6 months of inventory and we have a buyer’s market. Less than 5 months and we have a seller’s market. The smaller the available inventory, the tighter the market is. Keep in mind that these are simply guidelines and will differ from market to market.
What we should be looking at is the Inventory Numbers…those reflect the % of months of actual inventory for that price point. Note from 100-150 there is .01 of one-month inventory and we do not get above one month of inventory until we reach the 400+ price point. Remember a healthy market is identified as 6 months of inventory.
Another column to keep an eye on is the CDOM (cumulative days on market). This is the days the property has been listing on the market or the MLS (multiple listing service). As the price point increases the CDOM increases as the number of buyers in that price point is less.
So, what does this graph truly show us? It confirms we have a very low level of inventory or homes for buyers to choose from. With the lack of inventory that reflects into a “Seller’s Market” which can mean better price for sellers, less concessions necessary from the seller, and the opportunity for offers higher than the listed price or even multiple offers.
As for buyers, that means more competition for the same house and potentially multiple offer situations. With the prices at the top of the market there just is not the “room” in the price for the seller to cover a portion of the buyers closing costs for buyers needing that. Also, this requires buyers and their agents to watch for homes that hit the market and get into see them ASAP and being prepared to write an offer. Stressful for buyers for sure!
Although our market is extremely active, we have seen over the winter months prices settle to a certain degree and homes staying on the market a little longer. We hear our market is shifting and this shift over the winter could merely be the seasonality of our market or the signs of things to come. 2019 is looking to be another solid year and we expect the activity to pick up again with the nicer weather.
Hopefully this explanation sheds a little light on the “Market Stats” you hear about and see, and you have a better idea of what is truly going on in our local market. I would love to hear from you with any questions about the statistics, the market and if you are considering buying or selling real estate.