You must have heard of the real estate inventory by now. The real estate inventory is a document that lists all the properties that are available for sale in a particular area. We can divide the stock into two parts: the off-market inventory and the on-market inventory. The on-market list is what you see when you go to real estate websites like Zillow, Redfin, or Trulia. On the other hand, the off-market inventory is what you don’t see. It’s made up of all the homes for sale but has not been put up on any real estate websites yet.
Now that you know what the real estate inventory is let’s talk about how to decode it. There are many ways to solve real estate inventory. You can use it to determine the property’s location, price, size, and more. Let’s look at some of the most popular ways to decode real estate inventory today.
From a buyer’s point of view, knowing inventory level is fundamental. After all, the more houses there are on the market, the more negotiating power you have. If there are only a handful of homes on the market, you might have to pay more than you would like. But if there are tons of houses on the market, you can be pickier and maybe even get a better deal.
Study of Inventory Levels
You can study Inventory levels in three ways. The most popular way is to look at the number of houses on the market. This is known as the active listing inventory. If there are a lot of places on the market, it means that there is a high level of stock. If there are only a few houses on the market, there is a low level of inventory. For example, in San Francisco, the active listing inventory levels have been low for years. In February 2020, there were only 1,460 homes on the market. In contrast, there were 11,683 homes on the market in the same month in Indianapolis. That’s a huge difference!
Months of Inventory is the second way to study inventory levels. This method looks at how long it would take to sell all houses on the market. So, if there are 100 houses on the market and it would take 10 months to sell them, then the inventory level is 10 months. For example, in November 2016, the national Month of Inventory was at 4.3.
The third way to study inventory levels is by using absorption rate. This method looks at how many houses are selling every month and compares it to the number of homes on the market. So, if 10 houses sell in one month and there are 100 houses on the market, then the absorption rate is 10%. The material you use in the house also affects the rates and levels. Take the example of the Trex seclusions composite barrier being used in the premises. These houses will sell faster. Now, you go it.
Now that you know how to decode real estate inventory levels, you can use this information. If you’re a buyer, you can use it to negotiate power. And if you’re a seller, you can use it to price your home correctly.
Type of Market
Seller’s Market is the first type of market. There is more demand in a seller’s market than there is supply. This means that there are more buyers than houses on the market. So, if you’re a seller, you have the upper hand during such a market situation. You can be choosier about who you sell your house to and ask for more money.
Buyer’s Market is the second type of market. There is more supply in a buyer’s market than there is demand. This means that there are more houses on the market than buyers. So, if you’re a buyer in a buyer’s market, you have the advantage. You can be choosier about the house you want to buy, asking for a lower price.
The tie is the third type of market. There is an equal amount of demand and supply in a tie market. This means that there are as many buyers as sellers, and neither party has an advantage. So, if you’re in a tie market, it’s essential to be as knowledgeable as possible about the market.
Now that you know about the different types of markets, you can use this information. You should know that you’re in a seller’s market if you’re a seller. And if you’re a buyer, you should know that you’re in a buyer’s market.
Active listing, months of inventory, and absorption rate are the three most popular methods of decoding real estate inventory. If you know how to use these methods, you can decide about the property you want to buy or sell.