17 Percent Decrease in Total Housing Inventory Over Last Year is what I read in the KCRAR newsletter. What does this mean to buyers? What does this mean to sellers? When the number of houses to choose from decreases, several things happen:
--Sellers end up selling their houses for more which of course means buyers are paying more for a house than when the inventory is high
--Buyers end up having fewer houses to choose from
--Houses sell faster
--Multiple offers come in on a single house
17 Percent Decrease in Total Housing Inventory Over Last Year appears to be the trend for the next 12 months as well which will make a real estate purchase even more difficult next year.
A sellers' market occurs when the housing inventory in a given price range and given features has 6 months or less worth of houses to sell.
Buyers and Sellers need to know how many Actives are on the market and how many properties SOLD in the past year using the same criteria to find out how many actives there are so they will know whether it is a sellers' market or a buyers' market.
For instance, using the criteria:
3 or more BR, 1 or more BA, 1 or more car garage, basement, priced from $80,000 to $100,000 single family home
there are only 2 houses as Actives on the market.
Using the same criteria for SOLD's in the past year, there are 7 SOLD's.
This means 0.583333 similar houses SOLD per month during the past year.
This means that all the inventory of homes (2 in this case) should be SOLD in 3.42 months based on the past year's SOLD's (which is a very accurate benchmark because we have a very stable market here for Lawrence Kansas real estate.
Since 3.42 months is way less than 6 months, this is an excellent sellers' market for these two sellers.
If I were representing sellers in this type of situation, I would advise those sellers to raise the price of their house's asking price and that they should expect full price offers, take their time in responding to a lower than full asking price offer since a better offer could come in, expect multiple offers to be submitted, and that they may even get a bidding war.
If I were representing buyers in this type of situation, I would advise buyers to not "send a boy to do a man's job". In other words, not try to offer less than what the sellers are asking for unless they are willing to risk losing that house to another buyer.
Sellers should expect to get a higher SOLD price and Buyers should expect to pay more any time there is a 17 Percent Decrease in Total Housing Inventory Over Last Year.
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