Is it a buyers market? Sellers market? Absorption rate. Months of inventory. What it all means and where we are currently in Houston, Friendswood, Pealand, and Galveston

Hey there! AJ Here! Thanks for stopping by. Hey I want to explain to you what the absorption rate is, months of inventory and how that correlates to the market as a whole. Weather it be a buyers market or a sellers market. So lets just jump right in! Absorption rate is the rate at which real estate is sold in a specific area over a specific period of time. So this can be fine tuned to the city, the school district, even neighborhood wide. So you can look at, for example where I live here in Friendswood, we have two different school districts and they are very different with their inventory currently. Most people will calculate the absorption rates based in terms of homes sold per month. So this is historical data if you will. Its looking in the rear view mirror at what has sold in the past to make future predictions. Now months supply of inventory is a term you may have heard in the past, it is not the same as days on market, it is not! So months of inventory is an estimation of how long it will take for all the current homes currently on the market right now, in a given area to be sold based on that absorption rate. So number of active properties divided by the absorption rate is how we get months supply of inventory data. You with me? Got it? Simple right? Ok, Now you might be asking "Aj, why does that even matter? New homes are being listed all the time. It doesn't matter right?" It does matter! So months of inventory is a great indicator of how balanced the market is. Looking at the supply of inventory...months supply of inventory is very telling about that market. So months of supply of less than five (5) months means that it is a very healthy sellers market. It is a sellers market. Low inventory, they disappear rapidly off the market. Very competitive Six (6) months supply is considered a balanced market. Six months supply rarely happens. When it does, its usually swinging one way or another. Seven months supply and greater means its a buyers market. Ok, so looking at our area specifically Houston ISD, looking at it school district wide. Houston ISD, very large. 4.5 months supply of inventory. So, its still a sellers market! 4.5 months supply. Last years data said there was 28,062 homes sold in Houston ISD. Currently there's 10,592 active properties in Houston ISD. Whittling it down. Galveston...looking at the single family homes in Galveston, the city. That removes the data for condos and townhomes (which there is a lot of condos in Galveston). So looking at single family, months supply of inventory - 2.1 So 2.1 for Galveston. Friendswood ISD sitting at 2.6 months supply of inventory. Pretty competative here! CCID so Clear Creek ISD 1.9 months supply of inventory! And finally, Pearland, I have the data here for Pearland ISD 1.7 months supply of inventory! So, if no new houses come on the market today, with what is currently active (295 for pearland ISD) If no new houses came on the market today, in 1.7 months, everything would disappear. So, super competitive sellers market! Hey thanks for stopping by! I hope you learned something! Bye!