Understanding the Market

Determining a Buyer's, Seller's, or Balanced Market Condition:

• The Absorption Rate and Current Inventory are good indicators of whether we are in a buyer's or seller's market.
• In general, less than 3 months of inventory indicates a Seller's Market, while more than 6 months indicates a Buyer's Market. A balanced market occurs between 3 to 6 months of inventory.
• When in a seller's market you have the luxury of pricing slightly high, because buyer's have a lack of selection.
• When in a buyer's market it makes sense to price competitively, because buyer's have many options.

Absorption Rate = # Sold Homes/ # of Months

-Absorption Rate is the average # of sold properties per month.

Months of Inventory = # of Properties on the Market / Absorption Rate

-Inventory is how long it would take for all current properties to sell, given the current Absorption Rate.