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Staggering Stat
By definition, a real estate market is balanced when there is 4 to 6 months of inventory currently for sale.
Anything less than 4 to 6 months means a Sellers’ market, anything more means a Buyers’ market.
For example, if there are 1,000 closings per month in a market, the market would be balanced if 4,000 to 6,000 homes were available for sale.
Here is a staggering stat for you…
At the current pace of sales, the Front Range market would need 6 to 7 times more inventory for the market to be balanced.
This is why we don’t see any sort of significant market correction or anything resembling ‘the market crashing.’ Bottom line, the market is still undersupplied.
Here are the numbers:
• Larimer County has 441 properties for sale and would need 2,200 to be balanced.
• Weld County has 322 properties for sale and would need 2,000 to be balanced.
• Metro Denver has 3,023 properties for sale and would need 20,000 to be balanced.
More Homes Needed
The market is in short supply.
More homes are needed to fulfill the need to buyer demand.
Compared to exactly one year ago, the supply of homes is down:
- 32.6% in Metro Denver
- 25.1% in Northern Colorado
An interesting and useful measurement we track is months of inventory. This stat tells how long it would take to sell all of the homes currently for sale at the current pace of sales.
Of course, months of supply can vary greatly by price range and location. However, this stat does a good job of explaining the overall state of the market.
Specifically, months of supply tells us if the market is in balance.
A ‘balanced’ market is when there is 4 to 6 months of supply. A buyers market occurs when the stat is higher than this range. A sellers market occurs when it is lower.
The months of supply looks like this in our market:
- 1.0 months in Metro Denver
- 1.3 months in Northern Colorado
So, the market overall is significantly under-supplied and more homes are needed to meet demand.
