The Supply and Demand Ratio is the relationship between ‘New Offerings’ coming on the market in any given month or quarter and ‘in-Contract Sales’ in that same period. This activity is expressed as a percentage ratio.
The Supply and Demand Ratio is a frequently used indicator by real estate market analysts as well as highly professional and experienced real estate brokers. A rising percentage ratio is indicative of improving market conditions, or a condition of the demand for property keeping up with or even exceeding the supply. A declining ratio is indicative of weakening market conditions, or a condition of the demand for property not keeping up with the amount of supply coming onto the market. For example, a 100% ratio would indicate property being sold as fast as it comes on to the market in a given period. A ratio of 50% would indicate property coming on the market at twice the pace at which it is going off the market; also known as a Buyers’ market; and a ratio of 150% would indicate a market where supply can’t keep up with demand, or leaving the market at twice the pace that new inventory can replenish the supply; a Sellers’ market.
The Supply and Demand Ratio at the end of Q3 year over since 2012 is reflected as follows:
At the end of the 3rd quarter of 2014 the Supply and Demand Ratio in Hoboken was at its highest percentage and at a pace where supply could not keep up with demand. By the end of Q3 2016 that ratio adjusted downward by 50%. Although the present Supply and Demand Ratio of 72% is still a healthy percentage, we observe a trend where demand is slightly slowing in relationship to supply over time for the last two years. More simply put, new inventory is not leaving the market as quickly as it had in the past couple of years. Consequently, the Average Days on Market has increased slightly and the Unsold inventory at the end of a month is also increasing over time. These are subtle changes in the market that homeowners should be aware of before selling their homes. Despite these fluctuations, interest rates remain low, and it is still a very favorable time to sell. However, homeowners should always have the best information at their disposal to make the right marketing decisions.
If you would like more information on your real estate market, or for a complimentary market analysis, or any questions you might have about your local real estate market: You can contact me at any time on my website, by email, or directly (201)-463-3017
Photo by D Ramey Logan