Real Estate Inventory Reaches One Month

real estate inventoryThe real estate market doesn’t appear to be at base camp anymore. It’s climbed the mountain, possibly reached the summit, and now seems to be hanging out, smelling the remains of the May flowers. According to ABoR’s Central Texas Housing Market Report, the real estate inventory for all 5 counties that make up the Austin Central Texas Realty Information Service (ACTRIS) and Austin – Round Rock Metropolitan Statistical Area is now at a one-month supply.

How months of real estate inventory is calculated

Months of inventory are calculated by taking the number of homes listed for sale and dividing it by the average amount of homes sold per month within a 12-month period.

If the average number of homes sold per month is 1000 and the number of homes listed for sale is 3000, we would have 3 months of inventory (3000/1000). It would take three months to go through those 3,000 homes.  An increase in inventory helps bring supply up closer to demand.

What isn’t helping inventory grow at anything more than a snail’s pace is new construction.  I spoke with two homebuilders, KB Homes and Perry Homes recently. Both builders are quoting 9-12 months for build times. For comparison – it used to take 4-6 months.

My last listing went under contract in 4 days with multiple offers. My client did everything needed to get the home show-ready. I had professional pictures taken and direct marketed the property to over 8,000 REALTORS, so the listing came directly to their inbox instead of waiting for it to appear on a search. I posted on every Realtor group I belong to. Lastly, but possibly most important – I priced it correctly.

Selling a home in today’s market

Sellers should not assume houses are going to sell quickly. I am seeing more and more price decreases partially because inventory has slowed enough to make sellers question if their home is overpriced if it doesn’t sell in the first week. Some homes over the past year or so were being priced at a wish, hope, and prayer. At a certain point in time, the inventory was so low those prayers were answered and then some. With rising interest rates, and people starting to count their pennies for goods and services; the market has slowed enough that sales expectation needs to be based on actual sold data.

Buying a home in today’s market

Prices are still up, and multiple offers are still out there for the best homes in their respected markets and they are selling first. They aren’t overpriced where they are missing the target market. Austin is not in a bubble either. The market overall has been fairly consistent. Austin hasn’t had 4 months of inventory since 2012. It has been in a seller’s market for nearly a decade. As interest rates keep ticking up, home prices are still slowly rising or leveling out. Buyers need to balance the cost of waiting with their expectations. The more homes cost whether due to interest rates or price, the more concessions buyers will need to make to afford them.