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What’s All This Talk About Inventory? By Joseph Callaway
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or most of us, having a real estate discussion with a lender, title officer, or real estate agent quickly becomes a conversation full of eye-rolling jargon such as “escrow,” “days on market,” etc. Each of these terms becomes a learning process. One of the most important terms you should understand is “inventory.” Residential resale “inventory” is expressed as the period of time it would take for all the homes currently on the market to sell at the current rate of sales. For example, in 85254 there are about 61 homes for sale (as of March 15). Currently, 94 homes in 85254 sell each month. This means that 85254 inventory is equal to 61 homes for sale provided by 94 homes sold in a month, which comes to .67 months of inventory. In this case, because the inventory is a fraction of a month, it is easier to express the inventory in days: .67x30 = 20 days.
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Twenty days of inventory is terribly low. To put this in perspective, in 2008, we hit an all-time high of 60,000 homes for sale in all of Maricopa County
with only 4,000 homes selling each month. This was 15 months of inventory and prices were dropping like a stone because sellers had to compete for buyers. A “normal” market is about three or four months of inventory. In this situation, homes gradually appreciate, buyers have a reasonable selection, and sellers can get close to what they ask. This is a balanced market. Our current inventory of twenty days in 85254 is unprecedented. For every seller, there are dozens of buyers and prices are going through the roof. It’s what we call a seller’s market. This means sellers are writing their own tickets but, once sold, most sellers become buyers and that is the Catch 22.
Joseph Callaway is co-owner of Those Callaways, an independent brokerage operating in 85254 for 25 years. For additional information, visit ThoseCallaways.com or call 480-596-5751.
Tamra & Doug Wyman
623.551.6688 • www.wyman-services.com
18 • April 2021 • THE SCOTTSDALE STANDARD
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