Walt Dowdy
Learning Everyday Real Estate Terms
A local real estatemarket’s inventory level is another important gauge for pinpointing market trends. In real estate, inventory refers to the number of homes that are currently for sale. Homes for sale are often referred to as actives or currents.
Inventory Levels are measured in months (e.g. there are 14.3 months of inventory). This number is calculated by taking the total number of active listings and dividing it by the number of homes sold in the last three months (3000/400=7.5). Then multiplying that number by three (7.5*3=22.5). This will give you the number of months it would take to sell the current inventory with number of buyers currently buying. In the example, it would take 22.5 months to sale the current inventory.
The Inventory Level is one of the market gauges that tells us if we are in a Buyer’s Market or Seller’s Market.
Filed under: Learning Everyday Real Estate Terms, Understanding Real Estate Markets | Tagged: Housing Market, Inventory Level, Market Condition, Real Estate, Real Estate Definitions, Real Estate Terms
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