Q: What Does “Supply of Inventory” Tell Us?

When I talk about our “months’ supply of inventory,” here’s what I mean.

Today I want to have a quick conversation with you to explain a little bit of the jargon that I use day in and day out. I realized in my last video, I was using a lot of “Realtor speak” when describing our supply of inventory, so I wanted to explain that term a little further first.

The supply of inventory is a measure of our supply and demand in real estate. Right now, we have about a one-month supply of inventory, which is very low. If no new listings hit the market, everything that currently exists on the market would be sold within one month. 

There’s a simple way to tell whether you’re in a buyer’s or seller’s market based on inventory. A 4.5- to 5.5- month supply of inventory is considered a balanced market. Anything below that is a seller’s market, and anything above is a buyer’s market.

"I think that 'balanced' line is a little closer to four months."

In the 15 years since I’ve been in the business, I personally think that the “balanced” line is closer to about four months. Nevertheless, with just one month of available inventory right now, we’re firmly in a seller’s market where homebuyers have few choices and sellers bring in top dollar.

Even though a seller’s market is great for my clients, I wish we would see a little bit more inventory to help out the homebuyers we’re working with, but that’s a conversation for another time.

If you have any questions for me about our inventory, demand, or anything else related to real estate, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.