Single-family home and condo inventory, sales, and new listings rose over the past four months, although all remain at depressed levels. The number of home sales is, in part, a function of the number of active listings and new listings coming to market. Even though all those metrics are far below typical levels, these trends are all signs of a healthier market. Currently, inventory is still quite low relative to demand, so far more new listings could come to the market. Potential sellers who have fully paid off their property are in a particularly good position if they don’t have to finance their next property after the sale of their home. Since January, sales jumped 116% while new listings rose 63%.
As buyer competition has ramped up and sellers are gaining negotiating power, sellers are receiving more of their listed price. In January 2023, the average seller received 95% of list price compared to 104% of list in May. Inventory will almost certainly remain depressed for the rest of the year, and the market will likely only get more competitive in the summer months.
Months of Supply Inventory declined in May, moving further into a sellers’ market
Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The long-term average MSI is around three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). The East Bay market tends to favor sellers, especially for single-family homes, which is reflected in its low MSI. MSI has trended even lower over the past four months for both single-family homes and condos, meaning the market more strongly favors sellers. The sharp drop in MSI occurred due to the higher proportion of sales relative to active listings and less time on the market.
