Just because Franklin’s having a snow day today doesn’t mean you all get out of learning something! If you know a Realtor, you’ve probably heard them say things like “It’s a total seller’s market right now,” but we use more than a gut feeling to figure out who’s coming out on top given current market conditions. Realtors use a simple calculation called the “absorption rate” to determine whether market conditions are better for buyers or sellers, or whether they’re evenly balanced.
It’s easy to figure out the absorption rate for yourself. Using the market for Franklin single-family homes as an example, you can look at the market statistics for the last six months and see that 143 single-family homes sold during that time period. Divide that by six, and you get 23.83 homes sold per month. Now, take a look at what’s currently for sale, and you’ll see that there are 47 single-family homes currently on the market in Franklin. Divide 47 by 23.83, and you get 1.97, meaning that if none of the current active listings were withdrawn and no new listings were added, it would take 1.97 months to sell everything that’s currently on the market.
The Realtor’s rule of thumb is that anything from 0 to 5 months’ supply of homes is a seller’s market, meaning that there are more buyers than there are homes for sale, and sellers can expect high demand and charge higher prices. 5-7 months’ supply is considered to be a good balance. Anything over 7 months’ supply is a buyer’s market, meaning that there are more homes for sale than there are buyers, and sellers may need to lower their prices or add other incentives to successfully sell their homes.
The math says that it’s a very strong seller’s market for Franklin single-families right now; inventory is low and demand is high, so if you’ve been thinking about selling, now is definitely the time. But if you’re a buyer, don’t despair! Realtors have all kinds of strategies to help you succeed in a market like this, so don’t be afraid to take advantage of the low mortgage rates and give it a shot.