Inventory levels, what they mean

Real estate markets are considered to be “normal” when there is 6 months worth of inventory. This is a number that most of the Chicagoland area hasn’t seen since May/June of 2006. With inventory numbers peaking last October-December at levels around 24 months for most areas.

Technically what that means is that it would have taken 24 months to sell every home on the market if no new homes came on the market and the buyers continued to purchased homes at the exact same rate.

The way real estate inventory levels are calculated is by taking the total number of listings that are “For Sale” and dividing that number by the number of homes that are “Under Contract”. For example if there are currently 500 homes for sale and 50 home currently under contract then you would have 10 months of inventory.

Inventory levels should help sellers get a market snapshot. One that at least tells them how many sellers are attempting to sell their homes and how many homes went under contract during the month. This will give you an idea of how aggressively you need to price and prepare your home to get it sold.

If you would like to know the inventory levels of a specific city or zip code please leave a comment and will be happy to provide the statistics for you. In your comment please include the city or zip code and the type of home (single family or attached).