Inventory, How Low Can You Go?

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by Osman Parvez
Anyone who bought a house in Boulder this summer knows the market was very challenging.      Bidding wars were breaking out between potential buyers.   Even mildly attractive properties were getting offers and the most desirable houses were flying off the market.    Seemingly overnight, it shifted from a buyers' to a sellers' market.

The key driver?   Inventory levels were fantastically low, especially at lower price points. For the first time, I set my client's email alerts to search the MLS several times a day and I found myself responding to new listings like a fireman.  I was on call and ready to drop everything at a moment's notice to see new inventory.   We couldn't afford to wait a few days, it was pertinent to see new houses immediately.

How low can you go?      Most experts believe a healthy real estate market has 6 months of available inventory much of Boulder was well below that threshold.    Take a look at the chart below.


The chart shows months of inventory, a metric calculated by taking inventory and dividing it by monthly sales volume.      The current month (September data) and the average of three months is shown.

On the average - all local markets remain below 6 months of inventory, several are below 4, and a few are even below 3.     September trended upward (typical for this time of year) but only Erie has exceeded the 6 month threshold.

How Low Can You Go?

What's Your Strategy?
When market conditions change quickly, buyers and sellers need to adjust their strategy.    The key is to understand the market.    It's mandatory, not optional, to see a lot of inventory, tracking sale prices and days on market.     If you want to make a smart, educated decision - there are no shortcuts.    Choose a good agent and prepare to get educated.

note:  The chart above is in the upcoming Silver Fern Report.    It's one of dozens of charts analyzing the Boulder real estate market.    Are you subscribed?
---Note: Our goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Silver Fern Homes recommends careful and complete due diligence before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.

image:  thefuturistics'