The Liz Moore Market Watch Blog

How Long Should It Take To Sell My Home?, Part 1: Supply & Demand

Posted by Lynnette Tully on Mon, Apr 17, 2017 @ 01:44 PM

ph-sc-collaborative-planning-demand-supply-management.jpgHow long should it take to sell my home?

That’s a great question, and absent a crystal ball, we have to rely on market data to answer that question.  There are several things to consider, beginning with supply and demand.

Let’s start with supply.  The traditional benchmark for determining whether it’s a market favoring sellers or buyers is what we call “month’s supply of inventory.”  It is most commonly calculated by taking the number of active listings (we’ll call that inventory) and dividing it by the average number of homes that go under contract monthly.  The result is a factor that represents the number of months it would take to absorb all of the active inventory at the current sales pace, assuming no new listings come on the market.

Six months of inventory is considered a balanced market, with factors generally not favoring either side.  More than six months of inventory favors buyers, and less than six months favors sellers.

The other side of the equation is demand.  We typically begin by measuring how many listings close each month, and look for trends.

You have to be careful just studying one element of the market, however; for example, closings could be increasing each month which may lead you to believe that the market favors sellers…but, if new listings coming on the market are outpacing those sales, then the market could actually be softening.

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Tags: Sellers