Friday, June 24, 2005

Signs the real estate market is changing

Economy, unsold inventory among things to watch

Hot real estate markets don't stay hot forever. In some areas around the country, the home sale market has already slowed after being robust for several years.

For years, the unsold inventory index has been used to predict which way the market and home prices were moving. The unsold inventory index reports how many months it would take to sell the existing inventory of homes for sale at the current sales pace.

Changes in the unsold inventory index are directly related to changes in supply and demand. When the demand for housing goes up, the pace at which homes sell accelerates and the existing inventory of homes for sale decreases. As inventories shrink, prices often go up as more buyers compete to buy a limited number of listings.

When demand for housing goes down, it takes longer for homes to sell. Inventories tend to rise, as does the unsold inventory index. In this sort of environment, prices may decline.

Read the entire Dian Hymer Inman News article

2 comments:

Chicago and Las Vegas Real Estate said...

There is also a benchmark called the absorption rate - the number of properties coming in the market vs. the number coming off the market as closed sales. It is particularly helpful to show sellers and buyers alike what the absorption rates are for the local neighborhood and market. For sellers, you can use the data to emphasize points about pricing (either up or down), and for buyers, you can certainly gleen some market knowledge to determine a good negotiating strategy and initial offer. One thing is certain - some Chicago neighborhoods will always have better absorption rates than others. So, if you are searching for Chicago real estate, know your rates and play your cards close to your vest.

joel said...

Maybe it has something to do with a childhood home we fondly remember, many of us long for old homes built with solid construction, quality craftsmanship and beautiful details.
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