We're running Out of Homes to Sell?

Today in an office meeting my broker said something crazier than usual. He said that we were actually running out of inventory.

Believe me, I haven't heard a statement like that for a while. Here in Southeast Michigan we,ve had a pretty rough time of it. We started the housing recession before the rest of the country. I'm not convinced that first in means first out but any ray of sunshine is warm on could winters day.

If we go by the premise that 6 months of inventory is a "normal market" then anything above 6months would constitute a buyers market. More inventory would mean more choice and competition would drive prices down.

Conversely, less than 6 months would make a sellers market, less competition and less to look at makes the buyer jump on a home faster and lets the seller demand a higher price.

The graph below shows inventory levels in September of last year. You can see that Detroit had almost a years worth of homes on the market. Livonia, One of the bigger suburbs in the area had over 9 1/2 months available. 

Now look at the same graph for November of this year.

You can see that the active inventory for Detroit is 6.27 months, a huge drop. Livonia did even better with 4.47 months of available inventory.

This Could be the signal we've been waiting for that the market is leveling out. I'll keep a watch on it and keep you informed.