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 February, the overall supply was only 1.2 months. That is partly due to the time of year as January and February tend to have fewer homes on the market, with inventory increasing as we head into spring and summer.
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