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Housing Inventory – Blip, Breather or Shift

We’ve heard much this year about how solid the housing market is in Collin and Denton Counties this year.  Builders are optimistic.  Corporations are relocating their headquarters and/or regional facilities here.  It’s a great time to be selling a home.  We regularly watch the market closely and advise our clients of changes that we see that may be worthy of note.  Below is a graph that does a fairly decent job of explaining inventory levels.    The green line is all of the homes available in the MLS to purchase while the blue line shows the sales for a given month.  In a healthy market these lines will typically track each other.  Over the past several months the lines have month by month been gradually moving closer, indicating fewer available homes for the purchasing activity.  You’ll hear real-estate professionals refer to this as inventory or more specifically low inventory.  This graph represents a very robust market, somewhere around two months of inventory.  For reference, six months is considered a balanced market.

Price point definitely plays a part here.  It’s not shown in this graph, but at the lower end of the price spectrum it is much closer together, above 500K the spread is closer to 6 months.  What caught my attention in this one was the direction.  For the better part of the last 2 years these graphs have largely tracked each other closely and even tightened up gradually…again a reflection of a strong market for sellers.  Perhaps buyers took a breather in August or it’s just a blip in the data, but the lines moved about 700 homes farther apart in one months time.   Personally with the amount of wind at our backs here, I feel this is likely just a blip and it would take several months of this type of spread just to return us to a balanced market.  If it does continue however, buyers will have more options to choose from and more sellers may have to wait more than a couple of weeks to get their home sold.

 

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Jeff Kofahl

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