Inventory Levels

Inventory levels in the Philadelphia housing market are up over January 2010.  The latest data TReND MLS reports the following:

County Available Units Months of Inventory
Philadelphia 8,138 9
Montgomery 4,829 8
Bucks 3,421 8
Delaware 3,367 9
Chester 3,361 9

* Calculations based on single family dwellings as of 02/14/2011

These numbers basically tell us that if no more homes were listed for sale as of today, it would take 8 or 9 months to sell off the current inventory of homes.  This is an over-supply.  When there is an oversupply in the real estate market this puts downward pressure on pricing. 

Back when the market was on fire in 2004-2006, it was not uncommon to see inventory levels in the 2-3 month range.  In some areas, there were months that the levels went under 2 months.  Homes were selling the day that they went on the market.  This was a classic example of undersupply.  An “in balance” inventory is generally viewed as being between 3-6 months of supply.

It will be interesting to see how inventory levels are affected as the Spring Selling season begins.  Traditionally, Spring is the time when Sellers list their homes.  So we may see an uptick in inventory as new listings hit the market.  The question is, will the Spring Buyers be there to soak up the inventory?

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