Monday, December 15, 2008
Is it a Seller's or Buyer's Market? (Don't be Fooled)
First, let's define each. An equalibrium market in real estate is when there is 6 months worth of homes on the market. That means if no additional homes were put on the market, it would take 6 months to sell the existing inventory. When there is more than 6 months worth of inventory it is considered a Buyer's market because there is more to choose from. When there's less than 6 months of inventory it's considered a seller's market because with fewer choices, sellers can command premium prices. So where are we today in Santa Clara County? It varies by area, but as a whole we only have 6.5 months of inventory on the market (present inventory is 5,267 homes with an average of 878 homes per month selling). In Santa Clara County, we're not used to anything but a seller's market so it may not feel like an equilibrium, but this is what it looks like.