Sellers Market Vs Buyers Market
So let's answer the Internet. How do you know if you are in a seller's market or a buyer's market? And the metric that we look at is called the absorption rate?
The absorption rate is if no new properties were to come to the market, how long or how many months would it take for every active listing there is to be absorbed by the marketplace? If you are under five months for all inventory to be absorbed, you are in a seller's market. Five to six months is neutral. Sellers and buyers need to negotiate term as leverage swings both ways during transactions with buyers having other options to lean on should a seller not want to negotiate. Six months or more is a buyer's market where there are going to be more available properties for sale and people who want to buy them.
We are currently in a seller's market because there are only two months of inventory nationally. Zillow's chief economist is stating that he does not see us getting back to that four to five months neutral territory until Q four of September 2024. So this sellers markets is here and it's here to stay for quite a while.