Probably now you have a more or less definite understanding of what the real-estate market basic types are. But how can a person understand whether he is in a buyer's real-estate market or in a seller's one? What are the basic signs of them?
The most common signs of a buyer's real-estate market are: inventory is high as compared to previous months, years, fewer buyers are purchasing, resulting in lower closed sale numbers, comparable sale prices are higher than active listing prices, there is much more real-estate advertisement, median sales prices are declining, more than six months of inventory is on the market.
To compute months of inventory you should find the total number of active listings on the market last month, then the total number of sold or closed transactions for last month and finally you should divide the number of total listings by the number of total sales, which results in the number of months of inventory remaining.
The most important signs of a seller's real-estate market are: inventory is very low as compared to previous months, years, less than six months of inventory is on the market, comparable sale prices are lower than active listing prices, more buyers are purchasing, resulting in higher closed sale numbers, median sales prices are increasing, real estate ads are getting smaller.
Some of the signs of a neutral market are: inventory is normal as compared to previous normal months, years; sales numbers have stabilized; two to four months of inventory is on the market; real estate advertising remains uniform; comparable sale prices are close to active listing prices; median sales prices are flattened.