This is my favourite tool for assisting clients in estimating market value for their homes. This tool measures the constantly-changing dynamic between supply and demand. When reading this graph, keep in mind, the lower the line, the less supply exists relative to demand
. Low = Seller market, High = Buyer's market.
October is showing another slight adjustment back towards a sellers market , ending the month at 2.76
months of inventory. This leaves us in seller's market territory, but, JUST BARELY.
FYI, The Blue line represents 2022 YTD, Red is 2021, and Yellow is the past 5 year average.
How to interpret this information?
Traditionally, a supply of between 4-6 months
of inventory means that sales prices are likely stable
, not really increasing, or decreasing by any drastic amount. A supply lower than 4 months
indicates a seller's market, with pricing appreciating faster than inflation, and a supply over 6 months
is a buyer's market, with prices dropping rapidly, and days on market growing.
Sellers always wonder "What is the best time to sell my house?" They seem to want to attach timing to a calendar. We have been trained, for whatever reason, to believe that spring is always the right time to sell. But I firmly believe the best time to sell something is when supply of that thing is low, and demand is high. This is a pretty rudimentary concept. The reason I put so much stock into this metric is because it allows me to answer that question with complete confidence.
If you look at 2021, statistically speaking, the best time to sell was in February/March, and November/December. Counterintuitive, right?
I've long predicted that January/February 2022 was probably the best time to sell a house, and so far that remains the case.