Inventory Drives Everything

We hear it all the time: inventory is low.  That statement seems to explain everything. It explains why there are few properties for sale, why there is competition, resulting in multiple offers, and why prices are up.  It begs the question of why inventory is low to begin with.

Theories abound in this regard and the truth is that nobody really knows for sure. However, we do know some things for certain. For one, the average time homeowners stay in their homes has been steadily increasing. According to the National Association of REALTORS 2016 Profile of Home Buyers and Sellers, the median tenure of home sellers has increased from six years to ten years in 2016.  The increase in tenure coincided with the market crash in 2009.  Understandably, during a time of rapidly falling housing prices, those who didn’t have to sell chose not to. Another key factor holding back supply is cost. For most areas, with notable exceptions of Hinsdale and Western Springs, median sale prices have not yet recovered from their peak before the housing market collapse. We are getting close to regaining prior values. However, owners that bought at the height of the market may still not be able to sell for the same or more than what they paid.

How does that affect our local market? In La Grange and La Grange Park, inventory is indeed low. The absorption rate, or how long it would take to deplete the homes on the market without any additional inventory is only 3 months for La Grange Park and 4.5 months for La Grange. Those factors change depending on the type of home, with lower priced homes moving more quickly than higher-priced properties.

As it turns out, inventory is indeed low and that’s why it’s a great time to sell.

We hear it all the time: inventory is low. That statement seems to explain everything. It explains why there are few properties for sale, why there is competition, resulting in multiple offers, and why prices are up. That begs the question of why inventory is low to begin with.

Theories abound in this regard and the truth is that nobody really knows for sure. However, we do know some things for certain. For one, the average time homeowners stay in their homes has been steadily increasing. According to the National Association of REALTORS 2016 Profile of Home Buyers and Sellers, the median tenure of home sellers has increased from six years to ten years in 2016. The increase in tenure coincided with the market crash in 2009. Understandably, during a time of rapidly falling housing prices, those who didn’t have to sell chose not to. Another key factor holding back supply is cost. For most areas, with notable exceptions of Hinsdale and Western Springs, median sale prices have not yet recovered from their peak before the housing market collapse. We are getting close to regaining prior values. However, owners that bought at the height of the market may still not be able to sell for the same or more than what they paid.

LOCAL IMPACT

How does that affect our local market? In La Grange and La Grange Park, inventory is indeed low. The absorption rate, or how long it would take to deplete the homes on the market without any additional inventory is only 3 months for La Grange Park and 4.5 months for La Grange. Those factors change depending on the type of home, with lower priced homes moving more quickly than higher-priced properties.

As it turns out, inventory is indeed low and that’s why it’s a great time to sell.

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