How do you know if your market’s really recovering?
Regardless of what buyers and sellers hear in the national media, real estate markets are localized economic systems with complex factors influencing pricing, inventory, and trends.
So how do you know if the market has hit bottom, is still sliding down, or is showing signs of recovery? What key indicator should most influence your opinion?
According to the talented real estate mind of Bernice Ross, there’s one simple, precise indicator: How many months of inventory are on the market. Here’s Ross’ opinion on market health:
More than 8 months inventory = “rocky buyer’s market”
Between 7 – 8 months inventory = “bottom may be behind you”
Less than 6 months inventory = “good news, early signs of recovery”
To determine “months of inventory” use this equation:
Months of inventory = (total # of active listings)/(average # of monthly sales over the prior 12 months)
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