We could argue about ‘HOW’ to calculate whether it is the best time to sell or buy for eternity, and there are economists that do (God love ’em…).
The best thermometer we’ve found for how the market is doing is call the “Market Absorption Rate” and it asks these two questions:
1. How many homes sold in the past 12 months?
2. If homes keep selling at that number per month, how many months will it be until we have no homes left?
The goal here is to find the number of ‘months of inventory.’ So let’s go through an example… Say in your area 28 homes have sold in the past year. 2 and 1/3 a month. While it’s nice to know that homes have sold in your area in the past year, that alone isn’t enough to really tell us what the market is doing. So we ask the second questions “If homes keep selling at that number (2.33) per month, how many months will it be until we have no homes left?”
So then we find out (through the help of an expert agent) that there are 10 homes on the market right now. So 10/2.33=4.3 ‘months of inventory’ are on the market. Which is pretty typical right now in most areas in the Wichita real estate market. Most experts would agree with the following tags for number of months of inventory in any market:
Seller’s Market – Less than 4 months of inventory
Balanced Market – 4 to 6 months of inventory
Buyer’s Market – More than 6 months of inventory
With such a strong market in Wichita averaging 4.5 (7,413/1,660 in case you’re curious!) now is a great time to list your house and move up to take advantage of a rising market and incredible interest rates!