What Does Months Of Inventory Mean

Dated: 05/03/2017

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In real estate terminology, "months of inventory" means "at the current rate of sales, if no new homes hit the market, this is how long it would take to sell out".

For example, if there are 50 homes in a town on the market at any given time and in any given month 10 homes sell, then there are 5 months of inventory in that town (50/10=5).  

We consider 6 months of inventory to be a balanced market where the home buyer and home seller have the same pull in a negotiation.    More than 6 months is considered a "buyer's market" where if the buyer doesn't get the deal they want, they can easily find another home that fits their needs.  Less than 6 months is a "seller's market" and the home seller can demand more because they know the buyer has fewer options and might need to concede on some terms.

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Michael Cunningham

Michael Cunningham is a Real Estate Broker as well as the go-to tech and marketing wiz at Domicile Realty. A native of Tennessee, Michael arrived in Chapel Hill by way of Washington, DC where he help....

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