Buyer’s market or seller’s market? What’s the story right now for real estate on Oahu? If you’re chatting around the water cooler with your friends, I’m willing to bet you’ve heard that sellers have the upper hand right now.
Not so fast! Read on.
Some Terms and Just a Smidge of Math
Ok, first thing’s first. How do you know what’s a buyer’s market and what’s a seller’s market?
Most people follow a simple rule of thumb: If the “months of inventory” is below six, it’s a seller’s market. If the inventory is above six months, we’ve got a buyer’s market.
So…what does “months of inventory” mean? Simple: Look at the number of houses for sale right now. Divide that by the number of houses that went under contract in the last month.
For example, if there are 1000 homes for sale now, and if 100 homes went under contract in the last month, the “months of inventory” we have on hand is 10 (1000/100=10).
Months of inventory is a useful measure to figure out how quickly the market is moving. A low number suggests quick movement; a high number means things are sluggish.
The Market Skinny
So where are we now on Oahu? Overall, the months of inventory for single family homes on Oahu is about 4, which means we’re in a seller’s market. Great news for sellers!
However, once you get above the $1 million mark, things change quite a bit. For single family homes on Oahu listed for sale for $1 million or more, the months of inventory is currently 11.5. If your home is at the $3 million or more mark, the inventory stands at about 33 months! Great news for buyers!
A Hard Truth
Because the overall tenor of the market sets the mood for everyone, sellers listing higher end properties right now can feel a little disoriented. Why is my home taking so long to sell? Shouldn’t it be under contract by now?
The problem is that when people feel like the market is favoring sellers they will tend to list pretty high. Unfortunately, that can be problematic if the segment of the market you’re in isn’t the same as the overall picture.
Overpricing of homes above $1 million can cause them to sit even longer, exacerbating the problem. However, with some sage advice and a keen eye on the market segment that you’re in, you’ll be able to strike the bargain that fits your situation best.