I took a look at Months Supply for New Homes going back to 1963 in last Thursday's post.
Here is the chart for Months Supply for Existing Homes going back to 1994. The patterns on the charts look similar. 6 month's supply seems to be the magic balance between the forces of supply and demand.
I dug around for some charts on some different local markets. San Diego's real estate market hit 6 months supply earlier that the U.S. as a nation did. These next two charts are from The California Housing Forecast.
San Diego hit 6 months supply in January of 2006. Prices started to decline in San Diego right about that time and before they started declining in the U.S. as a whole. This earlier post showed graphs for home prices for San Diego (and the two cities discussed below).
Prices tapered off in Los Angeles in the middle of 2006 and started to decline towards the end of 2006. Los Angeles hit 6 months supply in late summer and early fall before dropping in the winter.
Seattle was one of the last 3 cities in the Composite 20 to start to decline. As of December 2007, it was still up year over year in price. King County (Seattle) hit 6 months supply in October of 2007. Prices started to first decline in Seattle in August of 2007 .
Here is a chart from Beau Betts blog on Seattle Real Estate.
Supply usually drops in the winter and picks up in the spring and peaks in the summer. If demand doesn't pick up this year, the months supply will start to skyrocket even more.
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