What Does "Months of Inventory" Mean?

Posted by Liliana Sorescu on Monday, May 5th, 2014 at 7:52pm.

If you read reports on the real estate market in various cities across the nation, you'll run into the phrase "months of inventory."
 
What does that mean?
 
This figure is determined by looking at the number of homes for sale and the average number of homes that have sold per month over the past year.
 
If there are 1,000 homes for sale and only 100 homes have sold per month, there's 10 month's inventory. You're in what is commonly called a "Buyer's market." Homes remain on the market longer and generally experience price reductions. Sellers are also more likely to offer concessions in this kind of market.
 
If 500 homes sell per month, there are only 2 months' inventory, and you're experiencing a seller's market. Homes generally get multiple offers within days of being listed, and remain on the market for a very short time. Buyers are likely to be bidding against each other to "win" the home.
 
Due to the law of supply and demand, prices begin rising and sellers are not forced to offer concessions.
 
In a balanced market – where supply is approximately equal to demand, you'll find approximately 6 months' worth of inventory. Prices may rise, but slowly. Correctly priced homes sell, but not as quickly. Buyers may be able to get small concessions.
 
Right now Vancouver has approximately 2 months' worth of inventory. I'd be glad to talk with you about what that means to you as a buyer or seller, and how you should plan your strategy for success.
 
Just give me a call at 604-607-5474  or email me at info@vancouverrealestatehomes.ca.  I'll be happy to answer all your questions.

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