Inventory is very important to buyers; it offers choices and it gives power to buyers. When inventory is high it is usually a buyer’s market and sellers are competing to attract the attention and the money of buyers. Low inventory hurts a buyer in a number of ways.
Realtors® measure inventory in terms of ‘months.’ At the current rate of sales, if nothing new came on the market, how many months would it take to sell off the properties currently for sale? This is also called the ‘absorption’ rate. At the high water mark in the recent housing depression we were officially at a 20 month supply, even more in some areas including Yamhill County. This was an unbelievable buyer’s market where demands were aggressive and negotiations were brutal on sellers. When the inventory falls below a 6 month supply, as it is now, it is considered a balanced market between buyers and sellers. At some point low inventory ushers in a seller’s market and the opportunities ripe for buyers dissolve into history.
Things can change quickly and they have in the past year! Current low inventory obviously means fewer choices for buyers. It also means more aggressive competition among buyers for the properties available in the marketplace. This condition results in quick and multiple offers on the same property. Caution is advised; this can suddenly morph into a seller’s market where sellers price properties higher and negotiate less.
Randy McCreith, Principal Broker
Bella Casa Real Estate Group
Cell: 503-310-9147 Fax: 866-281-6653
Published on: Apr 8, 2013