Our MLS furnishes informative housing market statistics that reveal, among other things, the average sales price of homes, the average amount of time listings stay on the market and the sales price versus list price ratios.
All are very important statistics to know, but another important statistic to keep handy is the amount of housing inventory versus current demand. This is a good indicator whether it's a buyer's market or a seller's market.
This is the formula I use to calculate inventory versus demand:
1. Perform an MLS search for all current active residential listings in your county, and record the number.
2. Perform an MLS search for all sold residential listings in the past 12 months, and record that number.
3. Divide the number of sold listings in the past 12 months by 12 to get a monthly average.
4. Divide the number of the first search for total active listings by the average monthly number of sold listings.
5. This final number is the amount of months it would take to sell current inventory at the current demand.
Example:
I gauge that any number over 4 months denotes a buyer's market, but I know of other colleagues who deem anything over three months as an indication of a buyer's market.
Sandy Nelson
Realtor for Olympia Area Real Estate
www.sandynelsonrealestate.com
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