Seller's Market?

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.  The numbers for June 2012 of the four major cities in the Triangle are  all showing a seller's market at less than 6 months of supply as follows:

• Raleigh (27601, 27603-27617):  4.3 Months of Supply (Down 50% from June 2011)
• Durham (27701, 27703, 27704, 27705, 27707, 27712, 27713):  4.8 Months of Supply (Down 38% from June 2011)
• Cary (27519, 27513, 27518, 27511):  3.4 Months of Supply (Down 46% from June 2011)
• Chapel Hill (27510, 27514, 27516, 27517):  4.8 Months of Supply (Down 38% from June 2011)

There are other sub-markets within the four major cities that are seeing months of supply less than 4% such as:

• Southwest Durham (27707, 27713):  3.7 Months of Supply (Down 46% from June 2011)
• Lochmere (27518):  2.8 Months of Supply (Down 75% from June 2011)
• North Raleigh/Midtown (27609):  3.7 Months of Supply (Down 52% from June 2011)
• West Chapel Hill/Carrboro (27516, 27510):  3.9 Months of Supply (Down 41% from June 2011)

As you can see, things are looking up in the Triangle.  If inventories continue to stay low, and demand continues to get better, we are going to see home prices rise and the market to get hotter and hotter.  For more great stats and information on the Triangle real estate markets, check out Fonville Morisey's Market Minutes Reports.

Brandon L. Penny
bpenny@fmrealty.com
http://www.facebook.com/fonvillemoriseydurham
(919) 402-1201