The months of inventory represents the number of months to sell the existing listings on the market based upon the average monthly sold properties for the immediate past 12 months for the local, state, or national real estate market. The statistic will vary from real estate market, as previously defined. A local real estate market for example would be the Naples area or Bonita Springs area. A state real estate market for example would be Florida. The national real estate market obviously is for the entire country. A prospective buyer or seller should be aware of the differences between the real estate markets, as the statistic varies.
If you have ever heard the terms buyer’s market or seller’s market the months of inventory this is the statistic assists in determining what type of market it is.
A neutral or balanced market is where the months of inventory is 5.5 to 6.4 months – commonly expressed as 6 months.
A buyer’s market exists when the months of inventory is equal to or greater than 6.5 months or commonly expressed as 7 months and more. With a buyer’s market there is numerous properties for sale and the sellers are more flexible with their price or the offer they will accept. Or, supply exceeds the demand. Basically, the buyer is in the driver’s seat.
A seller’s market exists when the months of inventory is equal to or less than 5.4 months or commonly expressed as 5 months or less. With a seller’s market there are fewer properties for sale and the sellers are less flexible with their price or the offer they will accept. Or, demand exceeds the supply. Basically, the seller is in the driver’s seat.
[...] final observation is – how does this affect the months of inventory? Share and [...]