How Housing Inventory Affects The Real Estate Market
Housing inventory is one factor that drastically affects the status of the real estate market. Depending on inventory you’re either in a buyer or sellers market which brings different advantages and downfalls. Housing inventory can fluctuate year to year or seasonally so it’s important to know what to look for as a seller and a buyer.
Here’s a breakdown of how housing inventory affects the market:
High Housing Inventory
When there is high housing inventory, this puts the real estate market in a buyer’s market. With a variety of homes to choose from in a buyer’s price range this gives more room for negotiation. In a buyer’s market there is more supply than demand meaning that buyers are at a position to get a better deal. It also means that sellers will want to market their home at a fair and enticing price and make sure to feature what makes their home unique in comparison to other homes in the same price range.
Low Housing Inventory
Low housing inventory puts the real estate market in a seller’s market. This means that sellers can get more money for their property. When there is low inventory there will typically be multiple offers on available homes, quickly driving up the price. If you are putting your home up for sale in a seller's market you can also expect your home to sell faster. For buyers this means that there will typically be a lot more competition for available homes, so it may take longer to find a home that’s right for you and your budget.
Stabilized Housing Inventory
Every so often the market will stabilize and housing inventory will be in line with housing demand. This means that the market is competitive for both buyers and sellers, but not extremely advantageous for one or the other. When the market is stable the room for negotiation exists for both sides. Prices that homes are ultimately purchased for will be more in line with the market as well. When the housing market’s inventory stabilizes, it typically doesn’t last long and will tilt either toward a buyers or sellers market in time.
Using the housing inventory levels in your area, you can make educated decisions about buying or selling a home. For example, waiting a few months until there’s lower housing inventory to put your home up for sale could mean a larger return. It works the other way around as well. Holding off on buying a house until the inventory levels pick up could mean getting a better price on a home. Consulting with a qualified Realtor will help you better judge when the timing is right for you and your family as the market changes.
