The following post is an excerpt from an original post by our own Brandon Penny of Fonville Morisey Highway 54 – Durham. He shares wonderful insights about our housing market here in the Raleigh, Durham, Chapel Hill and surrounding areas.Image via Itrustican.blogspot.com
With dwindling inventories due to reluctant sellers, fewer foreclosures and increase demand, the Triangle housing market is heating up. To show this, I first want to explain a little bit about supply and demand in real estate.
During buyers’ markets, homes may sit on the market for a while before selling, so sellers become more flexible and may even drop their prices. During sellers’ markets, homes sell quickly and sellers have a lot of pricing power. As a result, prices rise more rapidly than at other times.
In real estate, the relationship between supply and demand is calculated as “available inventory.” At the current sales pace, how long would it take to sell the total number of houses available on the market? That is how the real estate industry measures inventory.
Inventory is measured in weeks and months. Longer inventory times are associated with buyers’ markets. Shorter inventory periods are associated with sellers’ markets. Six months of supply is average. If there is less than six months supply, this means that it is a seller’s market with many buyers competing against each other to buy a limited pool of properties. The greater the months of supply, the converse is true. Months of supply is calculated by dividing the total number of homes for sale over the number of homes sold in one month.
The overall Triangle market is doing great….
To read more of Brandon’s insights including specific data about the Triangle housing market, please visit the original post here.
Image courtesy of itrustican.blogspot.com.