1039 - It’s Time We Start Redefining What a Balanced Market is by Andrew Syrios

It’s been generally accepted in real estate that a “balanced market” has about six months of inventory. In other words, the sales for that month equal one-sixth of the number of listed properties, so, all things being equal, it will take six months to clear that inventory. As Norada Real Estate Investments puts it,

“As a general rule, 5 to 6 months of inventory is considered to be a normal or balanced market. Over 6 months of inventory and we have a buyer’s market. If it is less than 5 months and we have a seller’s market.”

Even the National Association of Realtors states that “Historically, six months of supply is associated with moderate price appreciation.”

What’s immediately odd about this is that housing prices have fallen since last year despite what should be a seller’s market. In May 2023, prices were down 2.2% nationally from their peak in June 2022. At the same time, inventory was only half that of a “balanced market,” sitting at 3.0 months in May of 2023. 

Learn more about your ad choices. Visit megaphone.fm/adchoices