Buyer's Market or Seller's Market
And what difference does the amount of inventory make?
Why are "inventory" numbers so important to watch?
Generally, the industry agrees that the following 'rules' apply;
* less than 4 Months of Inventory = Seller's Market
* between 4-6 Months of Inventory = Neutral or Balanced Market
* more than 6 Months of Inventory = Buyer's Market
Then you might ask,
"What does a 'Seller's Market' or 'Buyer's Market' really mean?
A quick definition of these terms, from InvestorWords.com are;
Buyer's Market: A market which has more sellers than buyers. Low prices result from this excess of supply over demand.
Seller's Market: A market which has more buyers than sellers. High prices result from this excess of demand over supply.
With these guidelines in mind, we can see why inventory is important to watch. If you are looking to sell your home and the market is indicating a Seller's Market, then great! You will likely enjoy lots of buyers previewing your home, maybe even multiple offers, likely a faster sale time, and generally will not have to be aggressive when pricing your home or offer buyer incentives.
If you are looking to sell your home and the market is indicating a Buyer's Market, then you have some work ahead. You will likely not have as many buyers previewing your home, simply because there are SO many to choose from. You will likely have a longer sale time, and will surely need to be aggressive when pricing your home and the home must be in top condition to be competitive. However, when selling your home, if you are aggressive enough with pricing, you can overcome the Buyer's Market issues.
The same but opposite reasons would apply when buying a home. If you are buying a home in a Seller's Market, be prepared for a lot of work! If you are a buyer in a Buyer's Market - when you find a good deal - take it! Remember, there are LOTS of other buyers out there too looking at those 'good deals' too!