Navigating the inventory puzzle: What does it mean to me?

The term “months of inventory” is mentioned a lot in the real estate world and it has been used in defining the various expressions of “buyer’s market”, “seller’s market” or “balanced market”. To find the “months of inventory”, we divide the current inventory by the number of units sold within the last 30 days. A buyer‘s market is considered to be in play when the month’s supply of inventory is greater than 6, a balanced market is when the month’s supply of inventory is between 3 and 6 and a seller’s market occurs when the month’s supply of inventory is less than 3.

As of May 9, Orange and Seminole counties had an overall 2.7 months of inventory and on the surface one would say we’re in a “seller’s market”, but I wanted to scratch the surface and, as Paul Harvey might have said, “get the rest of the story”. So, I broke it down by price and it’s not surprising that all price ranges are not created equal.

Properties priced at under $250,000 are in a very strong “seller’s market” mode with 1.5 months of inventory. Those priced between $250,000 and $499,999 are in a balanced market leaning towards a seller’s market with 3.6 months of inventory. The $500,000 to $749,999 price range is in a slight buyer’s market with 7.3 months of inventory and the $750,000 to $999,999 and $1 million+ ranges are in a buyer’s market category with 12.3 months and 16.6 months respectively.

So, what does that mean? If you’re trying to sell a property under $250,000 and it’s been on the market in excess of 90 days, then a price reduction is probably in order. If your property is in the $250,000-$500,000 and you’ve been on the market in excess of 120 days, a price reduction/discussion is probably needed. The other categories are somewhat different, but if you’re not getting much activity/showings and you’ve been on the market in excess of 150 days, then a price discussion is probably needed.

I do feel that if your property is being marketed by a reputable and respected firm and it’s presented in its best light in electronic/print/social media, but does not sell within these timelines, then price is normally the factor that needs to be addressed.      

Scott Hillman is president of Fannie Hillman + Associates, a 35 year old Winter Park-based real estate company specializing in residential real estate sales and producer of The Hillman Report, a semiannual look at residential real estate in Orange and Seminole counties, as well as Hillman Homes, a customized quarterly publication showcasing local luxury listings, editorial features, a dining guide, shopping guide and cultural arts calendar - which can both can be viewed on the company's website (fanniehillman.com) or by calling 407-644-1234 for a copy.