Low Inventory

Low Housing Inventory= Appreciation

If you have been following the recent real estate market or following our blog over the last few months, the general theme is that the housing inventory is very low, and there are lots of buyers.  I have provided a graph below that backs up that point in the San Luis Obispo Market.  You can see a steady decline in inventory from a high in April of 2012 to the low in January of 2013.  February shows a slight increase in the inventory, as we might expect, with sellers getting ready for the spring selling season.  So what does this really mean to buyers and sellers.


The second chart will explain.  This chart shows how the months supply of homes impact housing pricing.  As you can see when the supply is low (1-4 months) we see price appreciation.   When we have a 5-6 months supply of homes for sale we have a normal market with very little if any appreciation, and finally when we have a 7 month or more of houses on the market, we get depreciation.

 Months Supply_Impact on Price 

So where are we today?  Looking back to the first graph the inventory of homes stands at 62, while the pended or properties that went under contract was 44.  This means we have less than two months of inventory.  This means we should see price appreciation.  That is exactly what we are seeing in the San Luis Obispo Market.  This is great news for sellers, but for the buyers not so much.  The good news is that the interest rates remain low making purchasing a home more affordable than it has been in many years.  The outlook looks good for the remainder of 2013.

Stay tuned for more up updates.

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