What Does "Months of Inventory" Tell You?

As a potential home buyer or seller, it's essential to understand the concept of months of inventory in real estate. It's a vital metric that helps gauge the state of the housing market, determine the level of competition, and make informed decisions about buying or selling a property.

So, what is inventory in real estate? Simply put, it refers to the number of homes currently listed for sale in a particular area. The months of inventory, on the other hand, is a metric that shows how many months it would take to sell all the homes on the market, assuming no new listings were added.

For instance, if there are 100 homes on the market, and 10 homes sell every month, the months of inventory would be 10 months (100/10=10). A high number of months of inventory indicates a buyer's market, while a low number suggests a seller's market.

In San Diego County, the current months of inventory is 1.2, which is incredibly low. A balanced market typically has 4-6 months of inventory. The last time the county had such low months of inventory was during the pandemic, which created a surge in demand for housing.

To give some context, in 2008, there were 13 months of inventory, which was a significant buyer's market. However, from 2012 to 2019, the county had a consistent 3-4 months of inventory. This stability allowed for a more balanced market for buyers and sellers.

Today, the low months of inventory explain why we're seeing multiple offers on almost every home, particularly in the median price point. This shortage of inventory creates a more competitive market where buyers have to act fast and at times offer above the asking price to stand a chance.

If you're interested in buying or selling a property in a particular area, it's crucial to know the months of inventory to make an informed decision. For instance, if the market has a low inventory level, you may have to adjust your expectations, increase your budget, or be prepared for more competition.

In conclusion, understanding the months of inventory is an essential step in navigating the real estate market. Click here for graphs showing the current market and months of inventory for North County San Diego. If you need more information or data about your area please contact us and we would be happy to send that information your way.