Sellers’ Market? Buyers’ Market? How Do We Know?

Sellers’ Market? Buyers’ Market? How Do We Know?

Whether a market is considered a sellers’, buyers’, or balanced market depends on how many ‘months of inventory’ are currently on the market. Meaning, if no new homes came on the market and they continued selling at the current pace, how many months would it take to sell all of the current supply (i.e. inventory).

‘Months of inventory’ is calculated by taking the number of homes selling each month and dividing that into the number of homes on the market. So if 10 homes per month are selling and there are 40 homes on the market, months of inventory would be four. 

Below are some definitions and characteristics of each market.
 
Sellers' Market
Few homes on the market, typically <4 month's supply
Sellers have more control than buyers
More buyers who want to buy than sellers who want to sell
Benefits sellers with higher prices, faster sales, less seller-paid buyer closing costs, multiple offers, and bidding wars

Buyers' Market
Abundance of homes on the market, typically >6 month’s supply
Buyers have more control than sellers
More homes available than buyers to buy them
Benefits buyers with lower prices, more choices, and more seller concessions like seller-paid buyer closing costs and interest-rate buy-downs

Balanced Market
A reasonable number of homes on the market, typically 4-6 month’s supply
Neither buyers or sellers have an advantage 

So which market are we in? Well, in Ada County as of the end of July, there was 2.5 month’s supply overall. Under $1.5m there is less than 3 month’s supply, over $1.5m there is 6+ month’s supply. That may increase a bit when the August numbers come out, so stay tuned for the latest information!