Brought to you by Scott P. Rogers, Funkhouser Real Estate Group, 540-578-0102, scott@HarrisonburgHousingToday.com
Brought to you by Scott P. Rogers, Funkhouser Real Estate Group, 540-578-0102, scott@HarrisonburgHousingToday.com
Friday, January 14, 2011
Follow this "months of supply" logic with me....
Remember....30 houses for sale, 3 houses sell per months, so it probably looks like this....
Do you believe it? It doesn't really work that way. Here's the problem (for sellers) --- each month when three houses sell (go under contract), they will always almost be replaced by another three new listings. Thus, every month the odds are the same (roughly) --- there will again be 30 houses for buyers to choose from, and only 3 houses will be chosen.
It then becomes clear that some houses will NOT be chosen, month after month. Again and again, a house will be a part of the 27 instead of a part of the 3. Thus, if 10 months of housing supply exists in a particular market segment, and a house has been on the market for 11 months, it isn't necessarily a terrible house --- it just has not been able to rise to the top 10% during any of the past 11 months.
That, then, is an interesting object lesson for sellers. What do you need to do (with marketing, price, etc) to be in the top 10% of the houses for sale? Settling for being in the top 30% might not work so well for youIf the top 10% keeps selling, and new listings keep landing in the top 10% --- your "top 30% house" could sit on the market for month after month.
- There were 18 detached home sales in the City of Harrisonburg under $180,000 in the second half of 2010.
- That’s 3 sales per month.
- There are currently 30 such homes listed for sale.
- Thus, each month only 3 out of the 30 homes will likely go under contract.
Remember....30 houses for sale, 3 houses sell per months, so it probably looks like this....
Do you believe it? It doesn't really work that way. Here's the problem (for sellers) --- each month when three houses sell (go under contract), they will always almost be replaced by another three new listings. Thus, every month the odds are the same (roughly) --- there will again be 30 houses for buyers to choose from, and only 3 houses will be chosen.
It then becomes clear that some houses will NOT be chosen, month after month. Again and again, a house will be a part of the 27 instead of a part of the 3. Thus, if 10 months of housing supply exists in a particular market segment, and a house has been on the market for 11 months, it isn't necessarily a terrible house --- it just has not been able to rise to the top 10% during any of the past 11 months.
That, then, is an interesting object lesson for sellers. What do you need to do (with marketing, price, etc) to be in the top 10% of the houses for sale? Settling for being in the top 30% might not work so well for youIf the top 10% keeps selling, and new listings keep landing in the top 10% --- your "top 30% house" could sit on the market for month after month.
