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If you follow Southeastern Michigan real estate, you've probably heard that it's a buyer's market. What is a buyer's market? Simply put, a buyer's market occurs when there's a whole lot of sellers and comparatively few buyers. We can use a tool called Months of Supply (MOS) to quantify how much of a buyer's market we are in.
To determine the MOS of a particular area we simply divide the number of homes of sale by the average number of sales per month. For example, if there are 12 houses for sale and they are selling at the rate of 2 per month, our MOS is 6 months. If no other homes were listed, it would take 6 months for all the homes to sell. A 6 month supply is generally considered a balanced market. The higher the MOS is above 6, the stronger the buyer's market. And likewise the lower the MOS is below 6, the stronger the seller's market.
Let's look at the real estate market in Macomb County for the month of November.
6676 Homes for sale
393 Homes sold in November
579 Homes sold per month (6 month average)= 11.5 Months of Supply, a strong buyer's market.
***Originally published at http://rickmarcum.com/wordpress2/2006/12/11/november-market-stats/ on December 11, 2006.***
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