Months of Inventory
What exactly does it mean and why is it important?
"Months of Inventory" (MOI) in real estate is a measure of how long it would take for all the current MLS® listings to sell if no new properties were added to the market. To calculate the MOI, you divide the total number of homes for sales by the total number of homes sold during a specific period. This is most commonly seen as a monthly number.
Months of Inventory= Total homes for sale ÷ Total homes sold
Having a thorough understanding of MOI can help you gauge current market conditions, and strategize more effectively if you are buying or selling a home.
- When months of inventory are low (2 or lower), the market is typically considered a sellers market
- When months of inventory are high (4 or higher), the market is typically considered a buyers market
- Months of inventory between 2 to 4 are typically considered “balanced” more or less
MOI is basic supply and demand principles. The more of something there is on the market, its value typically drops because it is plentiful. The demand for a product can affect how much of it is available (or vice versa), thus affecting the price.
The challenge
Buyers Market
A buyers market occurs when there are substantially more listings available than buyers. As competition among sellers increases, average price growth often slows down or even declines. Many sellers will begin to lower their prices to close the deal.
In this type of market, it might be wise to hold onto your property, if possible, until market conditions improve. Holding off on listing your property can potentially minimize the risk of losing significant value.
Realistically though, if you do list your property during a buyers market, you shouldn't expect your home to sell quickly. In a strong buyers market, it can sometimes take weeks of months to get your property under contract. With that being said, you may need to adjust your price expectations to make the sale...although this is certainly not always the case.
Working with a Realtor® to develop a competitive pricing strategy from the start, and dialing in a strong marketing campaign can help you ensure the successful sale of your property in a buyers market. Call me to hear more about how I can help you!
The Challenge
Sellers Market
A sellers market occurs when there are substantially fewer listings available than buyers. As competition among buyers increases, the average price growth often tends to rapidly grow.
Obviously, listing your property during a sellers market is a home owners dream! In this type of market, sellers will often receive multiple offers for their property. A very recent and prime example of a sellers market was during Covid. Sellers were receiving multiple offers, multiple offers over asking price, and many buyers were waiving appraisal contingencies and home repairs in hopes of convincing the seller to accept their offer over another buyers offer.
Even in a sellers market, it is crucial to work with a Realtor® who can develop a competitive pricing strategy, and be a resource in helping sellers select an offer that makes the most sense for them, especially when faced with a multiple offer situation.
As a buyer in a sellers market, it is important to work with a Realtor® who can help you competitively negotiate an offer on a property that may have already received multiple offers. In the crazy Covid real estate market, I was extremely successful in helping buyers get their offers accepted in multiple offer situations. Call me and lets talk about your home buying strategy!
The nuts and bolts
Final Thoughts
Regardless of whether you are selling your property in a buyers market or a sellers market; consider working on the curb appeal of your home, doing some light staging around your home and yard, and reach out to get a copy of my exclusive sellers guide to get more tips and tricks to help you get top dollar for your property!
Testimonials
We would recommend Erin to anyone who is looking for a realtor is knowledgeable, very responsive, who listens and above all genuinely cares about her clients. We have and will continue to recommend her to everyone we know.
- Cliff & Lisa Holding
Erin is outstanding at her job. She is an extremely effective communicator and sets reasonable expectations. She is hands-down fully responsible for the strategy that had our offer accepted in the highly competitive market of Uptown Sedona. I would 100% use her again in the future and recommend her to anyone in the Flagstaff/Sedona market looking to purchase or sell. Bravo!
-David & Jess Pollock
