When people ask me whether we are in a buyer’s market or a seller’s market, one of the first numbers I look at is months of inventory.

You may also hear this referred to as the absorption rate. It is one of the clearest ways to measure the balance between the number of homes currently available and the pace at which buyers are purchasing them.

But what does that number mean? And perhaps more importantly, why can months of inventory in Healdsburg look so different from Sonoma County as a whole?

The basic formula is: Number of active listings ÷ Number of homes sold during the measurement period = Months of inventory

For example, imagine a market has:

• 120 homes currently for sale
• 30 homes selling each month

The calculation would be: 120 ÷ 30 = 4 months of inventory

That means that if no additional homes came on the market and buyers continued purchasing homes at the same pace, it would take approximately four months to sell the existing inventory. Because real estate activity can fluctuate from week to week, I often look at sales over a recent 30-, 60- or 90-day period to get a more balanced picture of buyer activity.

What does this number tell us? Although every market is different, months of inventory is generally interpreted this way:

Less than approximately three months: A stronger seller’s market
Approximately three to six months: A more balanced market
More than approximately six months: A market that increasingly favors buyers

These are not rigid rules. Price range, property condition, location and buyer demand all matter. A beautifully presented home in a desirable neighborhood may sell quickly even when overall inventory is elevated. At the same time, an overpriced property may sit on the market even when inventory is relatively low. Months of inventory gives us the broader picture, but the individual property still needs to be evaluated within its own competitive category.

What Lower Inventory Means for Sellers? When months of inventory is low, sellers generally have more leverage.There are fewer homes competing for buyers’ attention, and well-priced properties may receive stronger activity, shorter marketing times and, in some cases, multiple offers. However, low inventory does not automatically guarantee a successful sale.

Today’s buyers are informed and selective. Even in a seller-favored market, they pay close attention to condition, presentation, location and value. A home that enters the market too far above its perceived value can still lose momentum.

What Higher Inventory Means for Sellers? As months of inventory increases, buyers have more choices. That means sellers may need to be more strategic about pricing, property preparation, staging, photography and video, marketing, showing availability, and responding to buyer feedback.

In a market with more inventory, buyers are less likely to overlook deferred maintenance or an ambitious asking price. Sellers may also need to allow more time for the right buyer to find the property. Higher inventory does not mean a home will not sell. It means the strategy becomes even more important.

What Lower Inventory Means for Buyers? For buyers, lower months of inventory usually means greater competition.  Buyers may need to be fully prepared before making an offer, have financing or proof of funds ready, move quickly when the right home appears, be thoughtful about asking for major concessions, and understand that highly desirable properties may attract more than one buyer. That does not mean buyers should overpay or waive protections that are important to them. It does mean they need to understand the competitive environment before deciding how aggressively to proceed.

What Higher Inventory Means for Buyers? When inventory rises, buyers often gain more negotiating power. They may have more time to compare properties, evaluate condition and negotiate matters such as purchase price, closing timeline, credits, repairs, and contingencies. But buyers should not assume that every seller is under pressure. A well-priced, beautifully prepared property in a prime location may still sell quickly, even when the overall market appears to favor buyers.

Let’s look at Healdsburg Versus Sonoma County. This is where local market knowledge becomes especially important.Sonoma County is a large and diverse real estate market. It includes everything from entry-level condominiums and suburban neighborhoods to rural properties, vineyards, luxury estates and second homes. When all those sales are combined into one countywide statistic, the result gives us a useful overview, but it does not necessarily describe what is happening in Healdsburg.

Healdsburg is a smaller and more specialized market. It has a higher concentration of luxury homes, country properties, vineyard estates and second-home buyers. These properties generally have a smaller pool of qualified purchasers and can take longer to sell. Because of that, Healdsburg may show a higher number of months of inventory than Sonoma County overall.

That does not automatically mean the Healdsburg market is weak. It may simply reflect the nature of the properties being offered and the amount of time required to connect a distinctive home with the right buyer.

Price matters too. Even within Healdsburg, one months-of-inventory figure does not tell the entire story. Homes under $2 million may be moving at a very different pace from homes priced between $2 million and $4 million. The market above $4 million may behave differently again. The same is true throughout Sonoma County. That is why I look beyond the countywide headline and separate the data by community, price range, property type, location, condition, recent comparable sales, and current competing listings.  A buyer considering a downtown Healdsburg home should not base a decision solely on countywide statistics. Likewise, the seller of a luxury vineyard estate should not compare the property’s expected marketing time to that of a traditional neighborhood home in another part of the county.

We must use these numbers correctly. Months of inventory is an important indicator, but it is not a prediction. It tells us about supply and demand based on recent activity. It helps buyers understand how much competition they may face, and it helps sellers determine how carefully they need to position their property.

The most useful question is not simply: “How many months of inventory do we have?” The better question is: “How many months of inventory are there for homes like mine, or for the type of home I hope to purchase?” That is where the number becomes truly meaningful.

Sonoma County statistics provide an important overview of our regional market, while Healdsburg data gives us a more focused view of a smaller and often more luxury-oriented marketplace. For both buyers and sellers, months of inventory helps explain who greater leverage may have, but it should always be considered alongside price, condition, location and the level of competition within a specific segment. Real estate is local, and in many cases, it is even more specific than that. The market can change from one town, neighborhood and price range to the next. Understanding those differences can help buyers make stronger decisions and help sellers create a strategy grounded in what the market is telling us.