Spring has arrived early in West Michigan in more ways than one. The Grand Rapids Association of REALTORS® released its' February 2012 Statistical Report which indicates that based on PENDING SALES, there is only 4.5 months of Housing Inventory available.
Well, here's a Short Primer about Inventory Levels and how the Supply & Demand Curve impact your position as a Home Seller or Buyer.
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)
Should the see-saw mentioned previously flip to the right, 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 2008, Inventory levels in West Michigan rose to approximately 14 months of supply overall in West Michigan 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 50% of their value in a Balanced Market.
When housing Inventory levels dip below 5 months Supply as they have in February 2012, the Market has clearly transitioned into a Sellers' Market. Based on Pending Sales, we would run out of homes to sell in less than 5 months! Amazing, especially when you consider how long we've heard all sorts of harsh statistics about the demise of the housing industry.
In closing, here are a few more numbers which are helpful to know if you're deciphering what you need to do to respond or react to today's real estate market. We're seeing an significant increase in home prices based on Pending Sale activity.
The average Pending Sale is approximately 15% HIGHER than this time last year at just under $126,000.
So, if you've been sitting on the fence, now's the time to jump off and buy a home while supplies last or put your home on the market and take advantage of the upswing in activity. Please contact Audu Real Estate at 616-791-0511 for information on any home for Sale in West Michigan.