We are still in the midst of a Sellers Market. Let’s define exactly what that is.
It’s a simple application of the laws of supply and demand. When there is more demand for a product, any product, than there is supply, you have a sellers market. And in a Sellers Market, the prices rise. Conversely, when there is less supply than demand, the prices will fall.
It’s simple – the best time to sell is when there is high demand and low supply.
In Real Estate, if the supply of inventory (available homes) is less than 6 months, it’s a seller’s market. If inventory is 6 – 7 months supply, it’s a neutral market. And if the supply is 8 months or more, it’s a buyer’s market. Simple?
Now let’s define supply. If the average Days On Market is 180 or less, that’s less than a 6 month supply of available homes.
This county has not had less than a 6 month supply of homes since August of 2012. Nationally, the inventory was 3.8 months supply in February 2017. We have now had 60 months of year-over-year price appreciation on homes. During this 60 month period, the median price of a home has risen to $228,400.
Do you think there’s a correlation between low inventory levels and price appreciation?