Monday, October 10, 2022 / by Brad Brethouwer
How the low housing inventory affects the real estate market.
Today I want to talk about the current housing inventory and absorption rate, and explain how that impacts home prices by using Dane County as an example.
There were 1,126 active listings in August and 775 sales last month in Dane County. To determine whether we’re in a buyer's or a seller's market, we need to calculate the absorption rate. Six months of inventory or more means we’re in a buyer's market, while six months or less means we’re in a seller's market. We have between one and two months of inventory, which is extremely thin.
"There is no slowdown of the market at this point."
This is why I don’t agree with all the reports about the housing market crashing. Inventory is extremely low, while interest rates have gone up. It hasn't made that huge of an impact, although it has slowed down some things. There was a little bit of correction, but all in all, it's still an extremely strong seller's market. If you’re thinking about selling, now is the best time. The insanity of the 2021 and early 2022 market is hard to compare, but now you have a moderate number of showings and offers.
The other stat worth looking at is the current sales rate of the new listings. In Dane County, the sales rate was 122% in August. This means that 122% of the new listings that came on the market were sold. Plus, the days on market is currently at 20. If we look at these two numbers, the market isn’t slowing down at this point.
For more details about the market or anything real estate related, call or email me. I’m always happy to help!