Is the Real Estate Market "Shifting" in Lafayette, LA?

I have been writing about the sharp rise in pending home sales in Lafayette, LA and Acadiana since the beginning of the year and our inventory not being able to catch up. If this trend continues, it could signal the beginning of a shift in our area and the end of the "buyers' market."

In "Shift," Gary Keller writes, "Shifts are easy to understand. They occur whenever supply and demand move out of balance. When seller supply exceeds buyer demand, it's a buyers' market. When buyer demand exceeds seller supply, it's a sellers' market. A shift occurs when the market moves from one to the other."

In real estate, supply and demand are measured in months of inventory and there are three types of markets:

• Buyer's Market: More than 7 months of inventory
• Balanced Market: between 5 and 7  months of inventory
• Sellers' Market: Less than 5 months of inventory

In April, months of inventory in Lafayette parish dropped below 5 for the first time in two years to 4.54 months. This means that if no other home is listed, it would take 4 and half months for the current inventory to sell. This is also a dip into a "Sellers' Market." In Acadiana as a whole, months of inventory is down to 6.14, the lowest in nearly three years, making it a "Balanced Market."

Whether the trend will continue remains to be seen. In the springs of 2009 and 2010, months of inventory dropped for 90 days but then went back up. What I think is different this time is the sharp rise in pending sales we are seeing at the same time. No one I've talked to remembers seeing so many home sales pending since Katrina.

It is still a great time to buy, however, we may be seeing the end of the buyers' market in our area, at least for a little while.

Have questions, comments? Drop me a line. I would love to hear from you!

Originally Posted at: Lafayette Real Estate News