Market Shifting in Favor of Buyers?

by Alex Stenback on November 23, 2005

The graphic above (click on it for a larger graphic), from the Minneapolis Area Association of Realtors excellent research department, depicts the "supply-demand" ratio for the Twin Cities.

The Supply-Demand Ratio is calculated by comparing the number of active listings at the beginning of each month with the total number of pending sales for the month.  The higher the Supply-Demand Ratio, the more supply there is relative to demand.

In shirtsleeve english, this chart shows us that there are currently almost six homes for sale for every pending sale (sold, but not yet closed.) Another way to look at this is that there are 6 sellers for every buyer. This a significant shift from this spring, and also this time last year, when there were about 3 and 4.5 listings (respectively) for each pending sale. 

Obviously some of this shift can be attributed to the normal seasonal real estate cycle.  But, as we all remember from econ101: many sellers + few buyers = lower prices. And if you factor in the assumption that most sellers with homes on the market Nov – Jan are more motivated (really, unless you have to, why would you sell now and not wait until spring?) and likely to deal, we may have a pretty good little buyers market developing.
MAAR Research Page [Mpls Area Assoc. of Realtors]

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