Let’s take a look at the way price and inventory have worked together over the past thirteen years in Sacramento County. There are of course many factors or “layers of the cake” so to speak that impact real estate values, but housing inventory is definitely a key indicator.
Key Takeaways: I know I can be crowned Captain Obvious for saying this, but values tend to increase when inventory is under two months. This has historically been an important level for upward trending values in the Sacramento market, which is important to consider since we are now at 2.1 months of housing supply. Basically, since the year 2000, when inventory has been under three months, the market has felt strong. On the other hand when supply has hovered above four months, values were usually stable at best or declining. There are of course many indicators to consider for a housing market, so it can be dangerous to isolate only one metric like inventory. However, it’s worth considering what the local market will look like with three or four months of housing supply. Keep these numbers in mind as the market continues to unfold.
Any thoughts? I’d love to hear your take in the comments below.