Does housing inventory correlate with price?
September 23, 2013 4:37 PM   Subscribe

In US metro areas, housing inventory shows seasonal patterns, with the inventory greatest in the middle of the year and lowest in the winter. Does lower inventory help, or hurt, a seller's ability to get their asking price for a house they are selling?

I'm helping a parent sell house in a significant metro area in the western USA. There is no immediate need to sell, but selling in the next 12 months would be best. Inventory trends are such that house inventory seems to be lowest in the late fall/winter months. However, what I can't figure out is whether the price is similarly affected. Does the lower inventory mean that the sellers that are on the market stand a better chance of getting the price they want? Or is it the opposite, with fewer buyers forcing sellers to lower their prices? Or is irrelevant?

This is feels like a really basic question, so if someone can point me to reputable resources for newbie sellers, I'd appreciate that too.
posted by StrawberryPie to Work & Money (8 answers total)
A low inventory of houses generally indicates a seller's market (anything under a six months supply of houses is usually the line between buyer's and seller's market). This may mean it will be easier to sell the house at the right price without having to give away too much during negotiations. In a hot seller's market, a house might get into a bidding war. Basically, you're competing against fewer sellers in the market. With more choices, buyers can be pickier and attempt to drive down the price.

Local conditions might affect price more than just the overall inventory of a town or city. Location, condition, schools, etc. I recently sold a house in a significant western city. I originally was going to wait another year, but the market took off and I was able to get a full price offer in two days of it being on the market (after two months of hard work getting it ready). I had doubts that the seller's market would last another year. Good luck.
posted by perhapses at 4:46 PM on September 23, 2013

Time of year sometimes also reflects specific seller patterns. Houses sometimes come off the market at certain time sensitive periods. Some folks hunker down and try not to sell during the winter in New England. Others cycle their homes in and out of the market to effectively test the market. Some are just looking to take their house off the market the minimum length of time so they can keep their property listed as a 'new listing' which sells easier than the house being listed for the 3 years it was actually listed for. Generally though, inventory, and quality of inventory as well as whether there are an abundance of buyers is what determines the selling price of a house.
posted by Nanukthedog at 5:04 PM on September 23, 2013

People prefer to buy before the school year starts, so houses sell in the summer for the most part.

Also, people don't like to move during the holidays, or in bad weather.

In some areas all bets are off and you can sell whatever, whenever.

Know who's an expert in your area? A realtor.
posted by Ruthless Bunny at 5:29 PM on September 23, 2013

Ask a Realtor with experience in that market.

Generally, people avoid the big move over the winter. There are a huge host of reasons: Bad weather conditions, mid-school year, don't want to move over the holidays, don't want to over extend the finances before Christmas. In most areas sales are slow from November to February which means your house will sit on the market longer. Longer days on market generally means a declining sales price. If you live somewhere snowbirds migrate then the market pattern is different.

If I was selling and could pick my month? I'd hit the market April/May.

However, a Realtor can tell you this For Free.
posted by 26.2 at 5:45 PM on September 23, 2013 [2 favorites]

Just a quick note about something I failed to mention: we have contacted a realtor :-). I'm just trying to do my homework and make informed decisions based as much as possible on multiple sources of data.
posted by StrawberryPie at 6:20 PM on September 23, 2013

Also, thanks to everyone for the answers so far.
posted by StrawberryPie at 6:21 PM on September 23, 2013

It's not inventory levels -> price, it's inventory levels and demand -> price. Inventory levels drop in the winter because demand usually does too; it may or may not be balanced evenly to have an effect on the price. Your local realtor should know the normal patterns of your area, though of course there can always be yearly fluctuations for weird reasons.
posted by dness2 at 9:09 PM on September 23, 2013 [2 favorites]

Your local multiple listing service may have publicly available data on sales prices and volume.
posted by yohko at 4:35 PM on September 24, 2013

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