Is it a buyers’ market or a sellers’ market?

Statistically speaking we are just about in a balanced real estate market which equates to more sensible pricing and negotiations surrounding the sale of a property for everyone involved.

Months of supply, or housing inventory, is used to measure the type of market we are in.  Generally speaking, less than 6 months’ supply of homes on the market favors the seller ( sellers’ market) because there are fewer choices for the buyer so it leads to more competition in pricing.    More than 6 months favors the buyers (buyers’ market) and leads to more negotiations and lower sales prices.

In my chart below you can clearly see the years 2000-2005 showing a sellers’ market by looking at the months of inventory on the last line.  I have used Clarke County as an example because I live there, but I have the ability to drill down to any county, zip code or even a neighborhood.  During those years homes were flying off the market at record breaking sale prices because of the imbalance of homes available.  By 2006 – 2011 the inventory of homes creeped up to 13 months in 2008 which means that it would take 13 months to sell everything that was for sale on the market at a point in time, unlike 2000 where the number was (1) one month (or less actually).   

In the post-recession years the statistics show the inventory levels coming back down which is good for everyone.  From 2012 – 2015 we’ve had 4 consecutive years of 5% plus price appreciation per year, which has brought us back to within 5-10% of the peak in 2006.

Clarke County, Virginia

Understanding the market is part of hiring a good Realtor.  Buyers also benefit from this information in that they can feel good about making reasonable offers on a property and know that the sellers will be ready to work with them.