I find it fascinating from time to time to look at the real estate stats in the Phoenix Metro areas.  I don’t expect people buying or selling to know a lot of this information, however it is important for your real estate agent to have a good understand of the current condition of the real estate market.  I would like to share with you the stats on the Months Supply of Inventory (MSI).

What does Months Supply of Inventory or MSI mean?

MSI is simple math of how long it would take for all the homes that are on the market to be sold or absorbed, base on the amount of homes currently on the market and the rate that homes have been sold in the past.

The math is simple.  If there were 350 homes for sale in Phoenix and 50 homes were sold each month, how long would that take to sell all 350 homes?  Take 350 divided by 50 and your MSI equals 7 months.

MSI STATS:  Stats based off the ARMLS – Phoenix Metro areas.

Sept. 2008 = 10.3 Months

Nov. 2008 = 13.1 Months

Jan. 2009 = 9.5 Months

Mar. 2009 = 5.5 Months

Jul. 2009 = 4.5 Months

Sept. 2009 = 4.9 Months

Why is this important for you to know? 

MSI is an excellent indicator of how balanced the market is.  This is a good way to know if we are in a “Buyers Market” or “Sellers Market”. 

A general rule of thumb which not always is the case is noted as:

Sellers Market = Less than 5 months MSI

Buyers Market = More than 7 months MSI

Balanced = Around 5-7 months MSI

This may be argued a bit by most Sellers right now, saying that it is still a Buyer’s market even though we are at 4.9 months MSI.  This may be true because of the competition many sellers face against the banks/foreclosures.