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Our market is shifting again, and buyers and sellers wonder how this will affect their plans to enter the market. One of the things that’s changing is the rise of inventory in our local area. What does this mean? Let me break it down for you.
Inventory in real estate refers to the number of homes actively listed for sale in an area. We currently have 155 active listings in our market, which is high compared to what I’ve seen in the past seven years I’ve been working in this market. We’ve never had more than 122 homes listed at once.
More inventory means more choices for buyers but also more competition for sellers. If you are a seller, pricing your home strategically gives you an advantage over those who overprice or underprice their homes.
Aside from inventory, you need to consider absorption rates. Absorption rates tell us how long it would take to sell all the current inventory if no new homes were listed. They are calculated by dividing the total inventory by the average number of homes sold per month.
Using our area as an example, we currently have 155 active listings and an average of 35 homes sold per month. Dividing those two gives us an absorption rate of 4.42, meaning we have about four and a half months of inventory. This means that, technically, we are still in a seller’s market. However, reaching six months of inventory indicates a shift to a buyer’s market.
With rising interest rates paired with the high number of homes on the market, sellers are becoming more willing to negotiate home prices and offer concessions to make sure that their homes sell quickly.
So, is it a good time to sell? Yes. The market hasn’t dropped significantly, and you can still get top dollar for your home. As a buyer, you have more negotiating power, especially with homes sitting on the market.
