Wednesday, August 21, 2013

How Supply and Demand Prices Your Home

As anyone who has ever taken an Econ 101 class is familiar with, price of any item is predominately based on "supply and demand": how many items are available in relationship to how many people want to buy that item.  Houses are priced mostly with the same philosophy.

The trajectory of home values is estimated largely based by how much inventory is available in the market.  Year-over-year home appreciation numbers have been strong.  Demand for housing has been up and the supply of homes have been astonishingly low.  According to KCM blog, however, that is beginning to change.

 The National Association of Realtors has reported that the month's supply of available housing inventory has increased from 4.3 months (as of January) to the current number of 5.2 months.  Inventory is anticipated to increase as we are moving forward.

Realtor.com just released their National Housing Trend Report, which monitored the shifting in home inventory levels across the country.  Here are their two major findings:

1. The dramatic year-over-year inventory declines have evaporated.

National inventories in July are 5.24% below the level from a year ago, compared to 16.47% in January.

In Chicago, citywide inventories are just 5.4% lower than four months ago, in April 2013, but were down an incredible 44.8% from January 2012 to January 2013. (Source: MRED LLC.)


2. Inventory declines have decreased in local markets.

The number of local markets with decreases in year-over-year inventory has tapered from 125 in June to 118 in July.  Experts feel this suggests coming fall inventories in some markets could level out to the inventory of last year. Chicago's downward trend is lagging the national one, but inventory changes have leveled off substantially.

What could these trends mean to the value of your home?  How does this market look for buyers?  Send me an e-mail or give me a call and we can discuss your standing in your local market.

No comments: