Month’s Supply of Inventory by Price Range 2011 06

Not Enough Inventory for Homes Priced below $800,000

The cluster of columns on the far right of the graph below illustrates the month’s supply of inventory in Loudoun County for all price ranges.  A market is generally considered to be in equilibrium (there is enough supply to satisfy demand) when the MSI equals four to five months.  As you can see, Loudoun County is undersupplied in the eastern portion of the county and in Leesburg.  However, there is enough supply in western Loudoun by virtue of its 6.4 month’s of supply.

If we break this down by price range, we can see that all three areas are undersupplied at list prices below $200,000.  Further, eastern Loudoun and Leesburg are undersupplied at all prices below $800,000.  Western Loudoun has a healthy supply of inventory for homes priced $200,000 to $599,999 but becomes oversupplied with homes priced over $600,000 and it is severely oversupplied with homes priced in excess of $1,000,000 (only four homes priced $1,000,000 or more have sold in all of Loudoun County this year, all in Waterford).

As of July 7th, there were 20 active listings in eastern Loudoun, 69 in Leesburg and 77 in western Loudoun priced over $1,000,000.  Compare that to the 50 listings for homes priced below $200,000 (21 in eastern Loudoun, 23 in Leesburg and 6 in western Loudoun) at the same time.

This analysis confirms that Loudoun County continues to suffer from a shortage of supply that is severely constraining existing home sales.

The month’s supply of inventory is calculated by dividing the active listings in a particular area (snapshot of activity) by the sales in that area over the previous month.  The definition of active listings excludes rentals and pending sales (those with contingencies or contracts) in this analysis.  Close prices are used for the sales and current list prices are used for the active listings to group them by price range.

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