How the Number of Months Supply of Homes Impacts Prices
(Updated 3-10-14) How do you determine where home values are heading? One strong indicator is knowing how much inventory is for sale in any given area. You have probably heard on the news about inventories being low which has resulted in higher home prices for sellers. The national news stories are not always reflective to what is happening locally. Who really cares about prices and trends in Las Vegas or Florida when you’re trying to find your place in St. Louis?
Pricing is Still about Supply and Demand
Pricing of any item is determined by supply and demand: how many items are available in relationship to how many want to buy that item. (remember Cabbage Patch Dolls or Beanie Babies) The chart above provides a guideline showing who is favored during times of low, even, or high amounts of home inventory.
1-5 month supply of homes favors sellers with prices or appreciation rising.
5-6 month supply is considered a balanced market place where prices have stabilized.
6+ month supply favors the buyers and represents depreciation of home prices.
Knowing these numbers can be helpful to you as a buyer to know which way the wind is blowing as you enter the market.
See “3 Ways to Know if You’re in a Buyers or Sellers Market
Current St. Louis and St. Charles Home Inventory Levels March 2014
The latest report covering February 2014 shows St. Louis County has a 6 month supply of homes for sale. This is more of a balanced market between buyers and sellers.
St. Charles County has a 8 month supply of homes for sale. This is a market that favors the buyer.
Below are inventory levels for several other popular areas: Ballwin Chesterfield Webster Groves O’Fallon and more …
The Future Outlook on Home Prices
We’ll cut to the chase here. Nobody really knows for sure. We are moving into the spring and summer season where typically both inventory and prices tend to increase. Overall the future looks promising. In the most recent Home Price Expectation Survey, over 100 leading housing analysts called for an approximate 5% increase in home values over the next 12 months. If you are a potential buyer you may want to get ahead of this curve before interest rates and prices … go up.
Whatever happens … the best thing you can do as a buyer is to know what’s going on around you. Finding Homes for You is an Exclusive Buyer Agent company that works for buyers and can help you tune in to the market. We do not take and/or promote listings. We only work for our buyers. Our job is to help you analyze and understand local real estate market trends and data to help you find the home that’s best for you.
Call 636-532-4200 if you would like to learn more about any particular area.
- How to Find the Home Value Range of a Home in 5 Seconds
- 3 Ways to Determine if You Are in a Buyers or Sellers Market
- Is There a Shortage of Homes in the St Louis Area
- The Quickest Way to Educate Yourself About the Home Buying Process