Topic: What is "Months of Supply"? And why does it matter?

Calgary: Months of Supply Explained

When you are looking to sell your home in Calgary or if you are looking for a new house, it is very important to understand the Calgary real estate market. 

 

One of the biggest mistakes that we see from those looking to buy or sell in Calgary is overlooking the market and just focusing on the homes and condos. The best place to start is with the market and gaining a deep understanding of the market. 

The best place to start is with the market and gaining a deep understanding of the market. 

Jumping into days on market, average price and the overall economy is important, but there is one statistic that your Calgary Realtor should be explaining. 

 

That statistic is months of supply or months of inventory. Although slightly different, sometimes you will hear months of supply be referred to in tandem with absorption rate. These figures are not the same, however, they do analyze the same data. 

 

Months of supply is the number months it will take to for the current supply to leave the market (assuming no new inventory enters the market and sales occur at the same rate). 

 

For example, if you have 100 homes on the market and 20 homes are selling every month, you have 5 months of supply/inventory. Simple!

 

Why is this number important to both sellers and buyers in the Calgary real estate market? This is one of the strongest indicators of market conditions. 

 

>6 Months of Supply = Buyer's Market

4-6 Months of Supply = Balanced Market

<4 Months of Supply = Seller's Market 

 

Generally, fewer than 4 months of supply indicates it is a seller's market. 4-6 months is considered a balanced market and over 6 months is a buyer's market. The correlation between a buyer's/seller's market is not always exactly like this, but it is usually very close. 

 

So, make sure you ask your Calgary Realtor, what are the months of inventory for Calgary and, specifically, for property type and area that interests you! 

 

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