Inventory Levels which can be used as a Rule of Thumb to determine what’s happening in the Real Estate Market and provide some guidelines to assist in determining when to sell or buy and what to ask your real estate agent.
A Balanced Real Estate Market (aka as a Transitional Market) refers to a market which has approximately 5-7 months of home inventory supply available. You will often hear agents reference 6 months as the mid-point of a Balanced Market. This level of economic activity reflects a time in which neither the Home Seller or Home Buyer is adversely impacted by supply and demand issues and the playing field can be considered somewhat level. The reference to the transitional nature of this type of market is that the situation is more like a see-saw, which will eventually tip in favor of one side or the other. (Buyer vs Seller’s Market)
Inventory levels would begin to rise precipitously above the 6-7 month level. The rise in the supply of homes available means more competition on the market for Home Sellers who eventually will need to lower their prices or give more concessions to secure a sale. In August 2010, Inventory levels in Houston rose to approximately 8 months of supply overall in due to the Housing Crisis and the increase in Distress Sales. Buyers in the market place at the time sometimes secured homes at far less than their value in a Balanced Market.
When housing Inventory levels dip below 5 months .Supply as they have in August 2013 to 3.3 months , the Market has clearly transitioned into a Sellers’ Market. Based on Pending Sales, we would run out of homes to sell in less than 3.3 months! Amazing, especially when you consider how long we’ve heard all sorts of harsh statistics about the demise of the housing industry.
Over all a great time to sell in Houston and surrounding areas. If neighborhood has its own micro market. Contact your local REALTOR® if you want to know more about your specific situation. In the other side ….still a good time to Buy? Absolutely “Yes” Rates are still at historic low levels. I hope this information helps