The year is just getting started but already there’s a problem with the housing inventory levels. Belmont’s housing inventory consisted of five homes for the month of January 2016. To put that into perspective, Belmont’s housing inventory has averaged 41 homes a month since 1998. In 2015 the average for the year was 12 homes a month. Since housing inventory fluctuates seasonally, we looked at the housing inventory levels for each January—that averaged 30—remember, we are at five right now.
This inadequate housing supply puts intense upward pressure on home prices. As we have seen in the past year alone, the amount sellers received of asking increased from 105% in January 2015 to 107% in 2016.
MONTHS OF INVENTORY
Month’s supply of inventory is the measure of how many months it would take for the current inventory of homes on the market to sell, given the current pace of home sales. For example, if there are 50 homes on the market and 10 homes selling each month, there is a 5 month supply of homes for sale.
The months of supply is a good indicator of whether a particular real estate market is favoring buyers or sellers. Typically, a market that favors sellers has less than 6 months of supply, while more than 6 months of supply indicates an excess of homes for sale that favors buyers. Belmont currently is running a housing inventory level of .56—yes, less than one month. On a national level, we’re still hovering around 5.6 months of inventory.
MEDIAN HOME PRICE
The median home price in Belmont increased 24% YOY, from $1,210,000 in 2015 to $1,500,000 in January 2016.
The median size home which sold increased YOY too, from 1,500 sqft in 2015 to 1,610 sqft in 2016. If it’s any consolation to buyers, while homes went up 24% in January 2016, buyers did get a home that was 7.3% larger.
Price reductions remain at an all-time low. Only one seller in 2015 had to lower their initial asking price and in 2016 no one suffered the price reduction fate. Imagine the chatter around the water cooler when it’s time to fess up to your colleagues yours is the only home that had to have its asking price lowered.
Of the homes that sold in 2016, seven sold for over the asking price, one home sold right at asking and one home sold for less—strange as that may sound given the tight market conditions—it’s still possible to overprice one’s home.
Days on Market [DOM]