Buyer’s Market or Seller’s Market?

Buyer’s Market or Seller’s Market?

In real estate the term “Months of Supply” is very important. It’s a term we use to tell us how much inventory of homes are available in relation to the number of homes to sell per month. The month of supply is the time it would take for all the current inventory to sell if all were sold at the current rate with no new inventory coming on the market.

How do we calculate “Months of Supply?” you are probably wondering.

Very simple. Here is an example using the City of Coral Gables to determine our market prediction:

In the past 12 months 480 single family homes sold in Coral Gables, FL. If we divide 480 by 12 we get an average of 40 homes per month.

In order to get the “Months of Supply” we divide the current supply which is 307 homes by 40.

 

 

We currently have 7.67 months of supply in the city of Coral Gables.

The standard for a balanced market is that of a 6-month supply. Less than 6 months of supply favors the sellers, since there are less choices for the buyers. More than 6 months favors the buyers and leads to lower prices.

 

 

We can break down the months of supply by looking at price ranges, neighborhood, number of bedrooms, homes with pools, etc.

We can agree that at the moment we are in a Buyer’s Market in Coral Gables.