Agents throw around the phrase 'months of inventory' constantly, and most buyers and sellers nod along while having only a vague sense of what it means. This is unfortunate, because it's genuinely the single most informative number for understanding whether you're in a buyer's market or a seller's market — and therefore how much negotiating power you actually have.
What Is Months of Inventory?
The concept is simple: if no new homes came on the market starting today, how long would it take — at the current pace of sales — to sell every home currently listed? The formula is straightforward: divide the number of active listings by the number of homes that sold in the past month.
A market with 100 active listings and 50 sales per month has 2 months of inventory — a strong seller's market. A market with 300 active listings and 30 sales per month has 10 months of inventory — a buyer's market. The general framework: below 3 months is a seller's market; 3 to 6 months is balanced; above 6 months is a buyer's market.
Where Is Riverside Right Now?
Riverside has been running at approximately 1.5 to 2.5 months of inventory consistently, with some micro-markets — specific neighborhoods or price bands — running even tighter. For historical context, the market was at less than one month of supply during the 2021-2022 peak, and it topped 12 months during the prolonged buyer's market of 2010-2012. We are firmly in seller's market territory, though less extreme than the recent peak.
What This Means for Sellers
Low inventory is working in your favor. The fundamental supply/demand equation gives you leverage. Well-prepared homes priced accurately are attracting multiple offers and selling at or above asking price. The nuance is that the market is no longer forgiving of sloppy pricing or poor preparation the way it was in 2021-2022. Today's buyers are more educated and somewhat more discerning. A home that is priced 5% above market and shows poorly will sit — but a home that is priced accurately and prepared professionally will still sell quickly and generate competitive interest.
What This Means for Buyers
Low inventory means you need to be prepared to move decisively on a home you love. Pre-approval letter in hand, clear budget established, and a clear-headed sense of your non-negotiables versus nice-to-haves are all prerequisites. The good news is that buyer contingencies have largely returned to the market — you can now reasonably expect to include a home inspection contingency in most offers, which was often impossible to do competitively during the 2021-2022 peak. There is slightly more room for negotiation on minor repair items and closing cost concessions, though not on price.
The most important thing buyers can do in a low-inventory market is not to confuse 'competitive' with 'reckless.' You should still inspect every home, still know your numbers cold, and still walk away from a deal that doesn't work financially just because you're feeling urgency. Good deals exist in every market condition — you just have to be positioned and patient enough to find them.
Inventory levels shift month to month and vary by neighborhood and price point. If you want a current analysis of the specific market segment you're interested in — whether buying or selling — we can have that conversation any time. No obligation.