Defining a Buyer or Seller’s Market

Inventory levels help define the state of an area’s housing market. It is some experts opinion that 12 months of supply signals a more balanced market. The relationship between supply and demand is simply determined by dividing the number of active listings by the number of closed sales in the prior 12 months; the result is defined in months or even years worth of supply. Many economists have concluded that a balanced market is a market that offers 6 solid months of available inventory. However, due to the seasonality of Naples real estate, 12 months of available supply would spell out a much more solid market.  In the most recent February Market Report, released by NABOR (Naples Area Board of REALTORS), it showed 6.85 months of available inventory in the Naples area. After two years of rapid sales, it looks as if the Naples Are real estate market is going through what NABOR calls a “natural correction process to a more balanced market.”