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Months of Inventory

One of the pieces of market data I track every month is Months of Inventory. This is a calculation that takes the Solds from the last 30 days and divides it into the available inventory. Six months of inventory is a neutral market. Under six months is a Sellers Market, over six months it’s a Buyers Market.

I track Months of Inventory for SLO County, SLO County + Santa Maria/Orcutt, and then for individual cities. The city calculations can vary a lot since the monthly volume of sales in some cities isn’t that high so it doesn’t take an active month (or slow month) to change the Months of Inventory. The cities with the most solds (Arroyo Grande, Atascadero, Orcutt, Paso Robles, San Luis Obispo, and Santa Maria) have a better indicator what’s going on then the cities with fewer solds.

If you look at the latest Months of Inventory calculations (http://www.slowatch.com/inventory.htm), we did climb to 10.7 Months of Inventory as of September 1st in SLO County compared to 9.0 Months on August 1st. But, we’re doing better than last September when we were at 13.0 Months.

I wanted to see how much foreclosures were impacting this calculation so I calculated the Months of Inventory for non-foreclosures in SLO County. The result was 11.4 Months. So, while the non-foreclosure is a bit higher than 10.7 Months (which includes foreclosures and non-foreclosures), it’s not that much higher which is good news for those homeowners trying to sell their home.

Written by Keith Byrd - Go to Keith's Website/Profile