Here’s how agents determine if we’re in a buyer’s or seller’s market.
Are we in a buyer’s or a seller’s market? To find out, agents use a tool called an absorption rate. Today we want to explain what an absorption rate is and what ours says about our market. Essentially, the absorption rate is how long it would take for all the homes in a given market to sell. For example, if a market has 100 homes and 10 sold in the last 30 days, we would divide 100 by 10 and get an absorption rate of 10 months.
Typically, a market with 10 months of inventory would be considered a strong buyer’s market. People would have many options when searching for a home, and prices would likely stabilize or even drop. This type of market was common after the last crash in 2008.
On the other hand, a market with three or fewer months of inventory is considered a strong seller’s market. In this type of market, prices tend to rise. Over the last few years, this market has been very common all over the country. There just isn’t enough supply to keep up with demand.
Finally, we have a balanced market, which typically has four or five months of inventory. These markets are usually rare since the market is always being pulled in one direction or the other.
Where are we today? Our market has 1,710 properties for sale as of April 2022. In the last 30 days, we sold 2,894 houses. That means we only have 18 days of inventory. We are in an extreme seller’s market like we haven’t seen in a very long time.
What does this mean for you? Now is an incredible time to sell your home. If you have considered selling for whatever reason, now is the time to pull the trigger and get a fantastic deal. While things may change in the future, our low inventory means that we’ll be in a strong seller’s market for a long time.
If you want to know what your home is worth or have any other questions, please call or email us. We are always willing to help!