TMREI: Too Much Real Estate Information
Sometimes absorbing the sea of Newberg, Oregon real estate information seems more like drinking from a fire hydrant. Yet, out of all the sometimes helpful real estate data bandied about, there is one especially helpful number, which when understood, can provide near-magical clarity to Newberg, Oregon homebuyers and homesellers, alike.
What Is It?
What is this ‘magic’ number and what does it represent? Simply put, it’s the current figure for housing inventory, typically expressed in months of projected home supply.
Housing inventory is also sometimes known as home supply, home inventory or housing backlog. Why is this number so important? Once you understand the single figure that defines our current regional supply of homes for sale, you have an instant ‘snapshot’ on whether you’re in a buyer’s market, seller’s market, or more of a balanced real estate market. Armed with that information, you’re far more ready to do ‘battle’ in the real estate ‘trenches’ and more likely to avoid the usual debilitating ‘minefields.’
Normal Home Supply
Among real estate experts, a ‘normal’ range for home supply in parts of Oregon-including Newberg-is frequently cited as somewhere between three to six months. For example, if the home supply figure is three, then hypothetically our market would be ‘out of homes’ in three months, provided no new homes were placed for sale. In other words, if our regional home inventory figure is somewhere between three to six months, we’re typically experiencing a normal market, meaning one not far from a balance of supply and demand, also called equilibrium. In a way, home inventory is kind of like an ‘absorption rate’ for how fast supply is used up.
Your Mileage May Vary
It’s helpful to understand that home inventory figures are more of an average for a region. In Oregon, some major real estate regions include Portland, Bend, Eugene, Salem and the Oregon Coast. Newberg is closer to Portland, which makes it part of the greater Portland area metro for purposes of market statistics.
So if your property is located in or near Newberg, the Portland area inventory figure is frequently cited as a bellwether for housing backlog. Your specific area could be somewhat different altogether, based on a hybrid of hyper-local factors affecting both demand and supply. That said, home inventory is an undeniable and convenient ‘thumbnail’ sketch to help assess your market.
What’s The Practical Impact of Housing Inventory?
Consider real estate and inventory like a pipeline. If more flows through it, the product is plentiful and therefore the cheaper it is to buy. So with a lower, dwindling home supply and the spigot turned down, the reverse is true. That’s when the local real estate environment favors sellers, because there are more buyers and it’s considered a ‘seller’s market.’ In that case, expect a short market time and an environment where homesellers receive multiple offers, often at or above listing price. If the supply of homes is higher, it’s considered a ‘buyer’s market.’ This means you can expect a longer market time, with homesellers seeing few, if any offers…and frequently for less than the asking price.
It’s routinely a good idea for buyers to get a ‘heads up’ before making an offer to determine how ‘hot’ or ‘cold’ the market is. Otherwise, if you ‘lowball’ a just-listed home in a seller’s market, you may be lucky to even get a counteroffer instead of an outright rejection by sellers experiencing lots of calls and showings on their property. Coming in with an offer that’s too low sometimes causes offended sellers to refuse to seriously consider a possible follow up offer.
What’s the Big Deal About Housing Inventory?
One reason housing inventory is so important is because it helps buyers and sellers to better manage expectations. Most buyers are interested in how long it may take to find the ‘right’ house. Inventory affects this. Alternatively, most sellers are interested in how long it may take to find a qualified buyer. Inventory affects this, too.
That’s because a high home inventory tends to slow down the market time and low inventory frequently provides a ‘jump start’ to activity. One way sellers can help to avoid an excessively long market time is to review comparable local home sales information provided by their Realtor to ensure proper, market pricing.
Another reason housing inventory is crucial is because it can significantly impact so many other important factors. In other words, inventory is a ‘driver’ for market time, selling price, appraisal results, lendability and more.
Okay, So Inventory Is Important. What Does It Look Like?
The above image provides a good example of fluctuating home inventory. As our Newberg, Oregon real estate market bounced back from the severe market downturn of the Great Recession, regional home inventory reduced from more than 20 months of housing supply to less than three.
Contact the Experts
Thinking about selling your Newberg, Oregon property? Know the market before diving in! Contact Certified Realty with your questions and for a free consultation on what your property could sell for today using the contact form below, or call (800) 637-1950.