Have you heard the term "months of inventory" when talking about the housing market? Wondering how it affects you as a buyer or seller? Let's break it down in simple terms.
Months of inventory refers to the estimated time it would take to sell all the homes on the market based on the current sales pace, assuming no new listings are added. To have a balanced market, it's generally considered ideal to have around 4 to 6 months of inventory.
In a balanced market with 4 to 6 months of inventory, there's a healthy balance between buyers and sellers. This means buyers have a good number of choices without an overwhelming surplus of homes, and sellers have a decent pool of potential buyers without facing crazy competition or long listing periods.
On the other hand, when there are less than 4 months of inventory, it's often a seller's market. This means there's limited supply and high demand, which can lead to rising prices and faster sales. Conversely, when there are more than 6 months of inventory, it may be a buyer's market, with supply exceeding demand, potentially resulting in slower sales and more room for negotiation on prices.
Vancouver is currently experiencing a Seller’s Market with low inventory. Prices have softened slightly, but competition remains high. So, let's take a closer look at how this impacts buyers, sellers, and even real estate investors:
If you're a buyer in a low-inventory market, you might face some challenges (which are not insurmountable!) Rising interest rates can make it trickier to find your ideal home. With fewer homes on the market, you may spend time searching, and attending numerous showings. Homes may sell quickly, which leaves buyers with a need to act fast.
Being a seller in a low-inventory market can be both exciting and daunting. While you may sell your home faster and at a good price, finding a new home that meets your needs and timeline can be a challenge. The pressure to secure a suitable home after selling yours may add some stress to the process.
Real Estate Investors
Experienced real estate investors can thrive in a low-inventory market. Rising property prices create an excellent opportunity to sell investment properties that aren't performing as well as others. It's a chance to recover costs and potentially make a profit sooner than expected. Investors can also take advantage of the market conditions to enhance their existing property portfolios.
What’s the Takeaway?
A low-inventory market can have different impacts on buyers, sellers, and real estate investors. Buyers may face challenges due to limited choices and rising prices, while sellers may find it challenging to secure a new home after selling. However, real estate investors can leverage the market conditions to their advantage. It's important to understand the local market. Give me a call anytime to discuss the market in your area. (360) 213-9444