Buyer’s or Seller’s Market? What Appraisers Look For Beyond the Headlines
Quick Overview
Is it a buyer’s market? A seller’s market? Somewhere in between? You’ve probably heard these phrases tossed around—but how can you actually tell?
In this article, we’ll break down a key indicator used by real estate analysts and appraisers alike: Months of Inventory. This is a companion to our Substack post, where our founder takes a closer look at how this metric plays out in neighborhoods just miles apart. Here, we focus on how inventory data shows up in an appraisal—and why it matters when determining value.
What Is Months of Inventory?
Simply put, Months of Inventory tells us how long it would take to sell all the homes currently on the market—if no new listings were added and buyers kept purchasing at the current pace.
It’s calculated by dividing the number of active listings by the number of homes going under contract per month. For example:
200 homes for sale / 50 sales per month = 4 months of inventory
200 homes for sale / 20 sales per month = 10 months of inventory
This gives us a quick read on market balance:
Under 3 months = Seller’s market (homes move fast, prices often rise)
4–6 months = Balanced market
Over 6 months = Buyer’s market (more selection, buyers have leverage)
How I Use It in an Appraisal
When valuing your property, I look at how quickly the local market is absorbing inventory:
Are homes being snapped up within days?
Are they sitting for months with little movement?
Are we seeing new listings every week—or just a trickle?
These trends give me insight into buyer demand, pricing power, and how aggressive (or cautious) the market is feeling.
I also look at how Months of Inventory is trending:
Is inventory shrinking while demand holds steady? That’s a pressure cooker—good for sellers.
Is inventory rising while sales slow? Buyers might have more room to negotiate.
Why It Matters to You
Understanding whether you’re in a buyer’s or seller’s market isn’t just about timing the sale or purchase—it’s about:
Setting realistic expectations about price and time on market
Backing up negotiations with real data
Supporting legal or financial decisions with market context
Whether you're selling a home, valuing property for divorce, or managing an estate, Months of Inventory helps tell the story behind the numbers.
Final Thought
Market headlines don’t always reflect what’s happening on your street. As an appraiser, I rely on local inventory data—not assumptions—to help you understand what the market is doing right where you are.
If you’re unsure whether now’s the right time to act—or just want insight into what buyers are doing in your area—I’m happy to walk through the numbers with you.