Months supply of inventory is an indicator of how long it will take to sell all homes available in the given price range at the current rate of sales. Typically, 6 months of inventory is considered a neutral or balanced market, where neither buyers or sellers have an advantage. Under 6 months is a sellers’ market, and over 6 is considered a buyers’ market.
Below is a chart showing months of inventory for various price ranges as of August 1, 2010. As indicated, homes priced under $75,000 are in a sellers’ market. Many of these are bank owned homes with high demand, particularly from investors paying cash.
Generally speaking, the range from $75,000 to $400,000 is in the range of a balanced market, with some borderline variation. It wasn’t long ago that anything up to about $150-$200K was considered firmly in the sellers’ market camp. Possibly yet another impact of the loss of tax credit incentives and buyers that made that price range so popular.
Buyers have the upper hand in the market over $400,000, and particularly in the range over $800K.
Click chart for larger image.
Keep in mind that these ranges apply to the Greater Phoenix area. The market segmentation will vary depending on the specific area of interest around Phoenix.
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