The following chart shows the market in relationship to supply and demand. REALTORS watch closely the ratio of the inventory against the pending sales. We know that if the gap between those two sets of data decreases, we cannot be aggressive when working with buyers. A healthy market is where a little give and take on both sides of the negotiation table exists or when roughly 30 to 35% percent of available homes go pending during the same month. As you can see from the below graph we moved from a buyer’s market to a seller’s market between February and March of 2012.
The average days on market is a great guide for gaining an understanding of how long it might take to receive an offer.
Use the average price of listings to gauge how confidant REALTORS and home owners are in a market and as a guide for the general direction of housing prices. For a more accurate gauge of a certain type of home, ask your real estate broker to get you the median priced home for your area.
Months of Inventory is just another way of looking at the supply and demand ratios. The months of inventory tell us how long it would take to sell every single home on the market if no other listings came on. A neutral market is 4 to 6 months supply, anything more is a buyer’s market and anything less is a seller’s market.