A seller’s ability to sell their home in ANY real estate market will be determined by the supply of homes for sale and the demand for that housing. In real estate, supply is represented by the current month’s supply of homes for sale (the number of homes for sale divided by the number of homes sold in the previous month).
- As of today there are 11,199 properties listed on the MLS in Palm Beach County.
- Sales reported last month in Palm Beach County were 2771
- That translates into an absorption rate based upon the above figures of a little over 4 months…
While there is no steadfast rule that will apply to pricing in every category of housing, here is a great guideline:
- Under 5 months’ supply creates a sellers’ market where there are not enough homes to satisfy buyer demand. Prices usually rise in this scenario.
- 5-7 months’ supply creates a balanced market. Historically home values appreciate at about the rate of inflation.
- Over 7 months’ supply creates a buyers’ market where the number of homes for sale exceeds the demand. Depreciation follows.
So…what is happening right now?
In most parts of the country, supply is dropping like a rock. According to the National Association of Realtors, total housing inventory is below a five months’ supply. This is well below inventory numbers of just a year ago and at levels we haven’t seen since 2005.
Here in Palm Beach County, supply is also at one of the lowest points that I have ever seen!
Based on the guidelines above, we can see that the supply/demand ratio is showing a sellers’ market where prices normally appreciate. This has created positive movement in housing values here as well as in most parts of the country.
Sellers have a great opportunity right now….and there is no guarantee that this confluence of events is likely to last. Historically, inventory increases dramatically as we approach summer. Selling now, while demand is high and supply is low, should garner you your best price.
If you’re in the process of interviewing agents to enable you to select the one to best represent you…make sure your agent knows the macro trend..but they also need to understand and know the figures as they apply, not only to your particular community…but the absorption rate/supply of competitive homes ‘in your price range’. You need to overlay all three of these to get an accurate depiction of the market for YOUR home.
Thanks for reading.
Steve Jackson…561.602.1258
Posts
