“The Pond” chart illustrates the concept of a market… where properties come on the market and go off the market at specific rates.
In the past 24 months, an average of .4 “new properties/month” entered the market (left).
They are being “sold per month” or absorbed, at .5 properties (right).
With a total inventory of 1 unit for sale (in escrow), currently for sale, this gives us a monthly supply of 2 month. In other words, if no new properties came on the market, everything would sell in 2 months. 6 months of supply is considered a “Balanced Market”. Anything less than 6 months, is considered a “Seller’s Market”.
Therefore, each month a seller has a 50% chance of selling.