Monday, December 19, 2011

How can you tell if it's a Buyers or Sellers Market?



Many people have opinions on the state of the housing market, but the easiest way to understand current and future conditions is to monitor the movements in the real estate absorption rate. Mathematically, this is the measurement of Current Active listing in the market divided by the NO. of listings Sold in last week.

A simpler way to express the definition of the real estate absorption rate is to say it is the number of weeks that the market will need for the foreseeable future. As you can see in table in week 1 of 2011 Market needs 189 weeks to sell all the active listings. In second week of 2011 Market need 75 weeks to sell all the active listings.

So how do we put this into perspective. Consider this: The typical home seller would like to move within two to four months of placing their home on the market, so over time, we have developed expectations in real estate and have defined situations as follows:

  •     Sellers Market: 1-40 Weeks supply of homes
  •     Neutral Market: 40 to 50 Weeks supply of homes
  •     Buyers Market: More than 50 Weeks supply of homes
  
As shown in table, Week 1 to week 13 Inventory was high and sales was low. That was Buyers Market period.




13 to 23rd week Inventory was almost same but sales was high. That was Sellers Market period.


 
33 to 43rd Week Inventory were normal and sale was normal. That was Neutral Market period. 

 
In the real estate graph above, Current active listings is measured in Blue, Weekly sales in red, and the green vertical bars show the real estate absorption rate. In the simplest sense, this means if nobody puts another home on the market ever again, we still have enough for sale to satisfy all buyers for the next year! That is a lot, and I suspect more will be hitting the market over the next year.


As Shown in table, Week 1 to week 23 Inventory was high and sales was low. That was Buyers Market Period.  

 
In the real estate graph above, Current active listings is measured in Blue, Weekly sales in red, and the green vertical bars show the real estate absorption rate. In the simplest sense, this means if nobody puts another home on the market ever again, we still have enough for sale to satisfy all buyers for the next year! That is a lot, and I suspect more will be hitting the market over the next year.

Provided by Donna Antonucci
Prudential Castle Point Realty
201-240-6832


donnaantonucci@gmail.com

hhttp://www.hobokenrealestatemonitor.com/
http://www.donnaantonucci.com/


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