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What is considered a healthy inventory in RE ?

This RE bussines like any other, has a lot to do to with supply and demand and I see that the supply has been shrinking at a nice pace for a few months now.
Looks like those people that were not convinced of a bottom in the cycle are not willing to wait any longer and the hungry feeding on foreclosures is well underway.

I hear that a 4-5 months supply is a good healthy inventory.
Going higher in months will create a glut of properties for sale that will push prices down again.
But in the other hand if the inventory starts falling below a 4-5 mo supply,
it will surely help to create a sellers market.
Any opinions on this?
How's your local market in this aspect?

  • September 20 2012 - US
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Answers (1)

My market is Cape Cod and we have been finding that if a house is priced right and looks good it sells quickly.  Waterfront is another thing, there is alot of money out there. 
  Buyers have been pent up for so long and banks are finally lending again so that is a good mix and supply of quality property is shrinking.  
  Presently I don't think it is a Buyers or a Sellers market but a healthy mix of both.
  • September 21 2012
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